Regulation J governs the collection of checks and other items by the Reserve Banks. Under existing Regulation J, the term “item” is understood to mean a negotiable instrument in paper form. Regulation J includes the warranties and indemnities that senders and Reserve Banks give for items that are collected or returned through the Federal Reserve Banks. Regulation J also describes the Reserve Banks' security interest in the assets of banks for which they collect items, as well as the amounts and methods by which the Reserve Banks may recover for their losses associated with collection and return of items. Regulation J authorizes the Reserve Banks to issue operating circulars governing the details of the collection of checks and other items and provides that such operating circulars have binding effect on all persons interested in an item handled by a Reserve Bank. Although the Reserve Banks in some cases handle items electronically today, the rights and obligations associated with electronic items are not set forth in Regulation J but rather are addressed by the Reserve Banks' Operating Circular No. 3, “Collection of Cash Items and Returned Checks” (OC 3).

The Check 21 Act and the Board's implementing amendments, contained in a new subpart D of Regulation CC, take effect on October 28, 2004. 1 These provisions are designed to facilitate banks' ability to process checks electronically. Today, a bank that accepts a check for collection must collect the original paper check unless the bank to which it sends the check has agreed to receive the check electronically. It is difficult, if not impossible, for a bank to obtain electronic check exchange agreements with all other banks to which it sends checks. If the paying bank demands presentment of the original check, the banks in the collection process for that check must process the original check even if their agreements with one another would allow them to handle the check electronically among themselves. The Check 21 Act addresses this inefficiency by allowing banks to create a new negotiable instrument called a “substitute check” that, when properly prepared, is the legal equivalent of the original check. Under the Check 21 Act, banks can remove the original check from the collection process, handle the check electronically by agreement, and later create a legally equivalent substitute check when and where an original check is required.

A bank that creates a substitute check is known as the “reconverting bank.” The reconverting bank makes two new warranties and an indemnity designed to protect substitute check recipients against losses associated with the check substitution process. These warranties are made, in turn, by each bank that subsequently handles the substitute check, whether it remains in paper form or is converted to electronic form. 2 Under this chain of warranties and indemnities, losses generally will be borne under the Check 21 Act by the reconverting bank, although the Act contains comparative negligence provisions to protect the reconverting bank from losses attributable to another person's fault.

The Check 21 Act allocates losses only among parties that handle a substitute check. However, it is possible that the problem giving rise to liability under the Check 21 Act was the fault of the bank that sent electronic information derived directly from the original check to the reconverting bank. For example, the bank that converted the original check to electronic form and sent it to the reconverting bank might have taken a poor image of the original check, which would preclude the reconverting bank from creating a legally equivalent substitute check and cause it to breach a substitute check warranty. The Check 21 Act does not by its terms give the reconverting bank recourse against its sender in that case. However, the reconverting bank may, by agreement, further allocate losses that it incurs under the Check 21 Act. For example, a bank that plans to create substitute checks could require the bank from which it electronically receives the original check to warrant the accuracy of the image of the original check.

After the Check 21 Act takes effect on October 28, 2004, the Reserve Banks will offer a wider variety of electronic check processing services, including accepting items in electronic form for collection and return. In some cases, an electronic item received by a Reserve Bank will be an electronic representation of a substitute check for which the Reserve Banks will receive Check 21 Act warranty and indemnity protections from the sender and give those protections to subsequent transferees. However, the Reserve Banks anticipate that most of the items that they will receive in electronic form will be derived directly from the original check and thus will not be subject to the substitute check warranties and indemnity. (Unless specifically indicated otherwise, in the remainder of this preamble the term “electronic item” refers to an electronic item derived directly from the original check and does not refer to an electronic representation of a substitute check.) A Reserve Bank in some cases will use an electronic item to create a substitute check for which it must make the Check 21 Act warranties and indemnity. In other cases, the Reserve Bank may transfer or present the electronic item to a subsequent party that creates a substitute check.

The Board in June 2004 published proposed amendments to subpart A of Regulation J that were designed primarily to bring the Reserve Banks' handling of electronic items within the coverage of Regulation J, acknowledge the requirements of Regulation CC for substitute checks, and add new warranties and an indemnity that would apply when a sender sends an electronic item that is not subject to subpart D Regulation CC. 3 The proposed supplemental warranties and indemnity were intended to allow a recipient of an electronic item to pass back subsequent Check 21-related liability to the sender of that item where appropriate. The proposed supplemental warranties and indemnity therefore closely tracked the warranties and indemnity in subpart D of Regulation CC.

The other proposed amendments generally were technical in nature, such as supplementing existing definitions in Regulation J to correspond to definitional changes in Regulation CC and reorganizing and revising some existing regulatory text for greater clarity.

The Board received comments on the proposed rule from 41 commenters, including 32 depository institutions and organizations representing depository institutions, six consumers and consumer groups, and three other organizations. The vast majority of commenters agreed that it was appropriate for Regulation J to contain a Check 21-like liability structure for electronic items that would allow Reserve Banks and other recipients of such items to pass back liabilities subsequently incurred under the Check 21 Act. However, commenters expressed concerns about specific aspects of the Board's proposed liability structure and made suggestions for how the Board could make that structure more equitable. Commenters also encouraged the Board to clarify that the new supplemental warranties and indemnity for electronic items would not alter the liability structure for substitute checks in the Check 21 Act and subpart D of Regulation CC. Specific substantive comments are discussed in more detail in the Section-by-Section Analysis.

The Board's final rule is similar to the rule that the Board proposed for comment. However, the Board has made a number of clarifying changes in response to the comments received and its own further analysis. These changes include adjustments to the definition of electronic item and to the liability structure applicable to an electronic item. These changes also state more directly that Regulation J does not alter the liability structure for substitute checks and paper and electronic representations of substitute checks set forth in Regulation CC. Moreover, the final rule provides that a sender of an electronic item makes the Uniform Commercial Code (U.C.C.) transfer warranties for an electronic item as if it were an item subject to the U.C.C. and makes the warranties of § 229.34 of Regulation CC as if the electronic item were a check subject to that section.

This section-by-section analysis focuses on the provisions of the existing or proposed rule that the Board changed or that were the subject of comments or the Board's own further analysis. For all other provisions, the Board's reasoning in the section-by-section analysis of the Board's proposed rule is incorporated by reference.

A. In General. One commenter suggested that the final rule should use the terms “person” and “party” in a manner consistent with the U.C.C.'s usage of those terms. The Board agrees that Regulation J's word usage should be consistent with the U.C.C. and has made revisions accordingly.

Some commenters asked the Board to clarify that when Regulation J uses the term “handle” with respect to a substitute check, that term refers to a transfer, presentment, or return of a substitute check. These commenters sought clarification that by “handling” a substitute check under Regulation J, the sender would make the substitute check warranties and indemnity described in subpart D of Regulation CC. Regulation J generally uses the term “handle” to refer to a transfer, presentment, or return, as the context requires. However, the substitute check warranties and indemnity are made directly under Regulation CC according to the terms of that regulation, which Regulation J does not alter. The Board's amendments to §§ 210.5 and 210.6, which are discussed in detail in the analysis of those sections, further clarify the interaction between Regulation CC and Regulation J.

B. Item and electronic item. To bring electronic items under the coverage of Regulation J, the Board proposed to amend Regulation J's definition of the term “item” to include an electronic item. Some commenters requested that the Board ensure that its definition of the term “item” would not affect the U.C.C.'s definition of that term. All the definitions in § 210.2 of Regulation J are prefaced by the phrase “as used in this subpart” and do not apply to any other law or regulation. Thus, the modification of the definition of the term “item” for purposes of Regulation J does not alter the meaning of that term under the U.C.C or the meaning of the term “check” under Regulation CC. 4

The proposed rule stated that an electronic image of a paper item “ together with information describing that item” was an electronic item (emphasis added). The Reserve Banks in some cases will handle in separate files the image portion of an electronic item and the information portion of the item, which would include a record of the magnetic ink character recognition (MICR) line data from the paper item and of any indorsements applied to the item electronically. The final rule therefore changes the phrase “together with” to “and.” The Board also has amended the electronic item definition so that electronic check-related information will not constitute an electronic item unless it is the type of electronic file that a Reserve Bank has agreed to handle as an item. This revision addresses the fact that some check-related information that the Reserve Banks handle electronically is for information purposes only and is not intended for collection as an item or reconversion to a substitute check.

Some commenters recommended that the Board clarify in § 210.3(f) that nothing in Regulation J alters the liabilities of persons interested in a substitute check or a paper or electronic representation of a substitute check, as established by the Check 21 Act and subpart D of Regulation CC. As discussed in more detail in the analysis of §§ 210.5 and 210.6, the amendments to Regulation J are not intended to alter the application of the liability provisions of subpart D of Regulation CC. Although the Board has not amended § 210.3 as suggested, the final rule makes the clarification requested by commenters in several other places by indicating that Reserve Banks can be held liable under subpart D ( see, e.g., §§ 210.6(a)(2)(iii), 210.6(c), 210.12(e)(2)(iii)), by specifically acknowledging the applicability of Regulation CC to items collected through Reserve Banks ( see, e.g., §§ 210.5(a)(5)(i)(C), 210.5(b), 210.12(c)(5)(i)(C), and 210.12(d)), and by stating that nothing in Regulation J alters the liability that senders of substitute checks (or representations thereof) bear under subpart D ( see, e.g., §§ 210.5(a)(5)(ii)(B), 210.12(c)(5)(ii)(B)).

The Board proposed to amend § 210.4(b)(1) to clarify that the Administrative Reserve Bank of the paying bank was deemed to have handled an item sent to a Reserve Bank for collection. On further reflection, the Board has deemed that this clarification is not necessary.

A. Addition of U.C.C. transfer warranties and Regulation CC § 229.34 warranties for all electronic items. The U.C.C. generally is understood to apply to items in paper form, although it allows a paying bank to agree to receive electronic presentment of an item. When presentment is made electronically by agreement, U.C.C. 4-110 treats the presentment notice as an item or a check as those terms are defined in the U.C.C., and the presenting bank therefore makes the presentment warranties in U.C.C. 4-208 to the paying bank. However, electronic items as defined in Regulation J that are handled for collection rather than presentment might not be items or checks under the U.C.C. and are not checks under Regulation CC. As a result, electronic items sent for collection might not be subject to the transfer warranties in U.C.C. 4-207 and are not subject the check collection warranties in § 229.34(c) of Regulation CC.

To ensure a full chain of U.C.C. transfer warranties and Regulation CC § 229.34(c) warranties for an item that a Reserve Bank receives or sends in electronic form, the Board's final rule adds a paragraph to § 210.5(a) that provides that by sending an electronic item a sender makes all the warranties set forth in and subject to the terms of U.C.C. 4-207 as if the electronic item were an item subject to the U.C.C. and makes the warranties set forth in § 229.34(c) of Regulation CC as if the electronic item were a check subject to that section. Section 210.6(b) contains corresponding Reserve Bank warranties. These new warranties apply to all electronic items, regardless of whether they are derived directly from an original check or from a substitute check. Because senders and Reserve Banks must make these new warranties for an electronic item subject to the terms of U.C.C. 4-207 and § 229.34(c) of Regulation CC, they must make these warranties to all the parties described in U.C.C. 4-207 and § 229.34(c) of Regulation CC.

B. Content of supplemental warranties for electronic items that are not representations of substitute checks. Under proposed § 210.5(a)(4)(i) and § 210.6(b)(3)(i), the sender of an electronic item would warrant, among other things, that the item “accurately represents all of the information on the front and back of the original check as of the time that the original check was truncated” and “replicates the MICR line of the original check, except for any changes required or permitted by part 229, subpart D of this chapter for substitute checks.” Several commenters expressed concern about the use of the word “replicate” when describing the MICR-line content portion of the warranty. These commenters thought that the warranty should distinguish more clearly between the MICR line that appears in the image of the front of the original check and the separate MICR-line information that must accompany that image. These commenters also noted that the word “replicate” might not adequately convey the idea that, when creating the electronic item, the truncating bank would transfer the MICR-line information that appeared on the original check to a different format.

Several commenters concerned with the MICR-line component of the warranty also suggested that a sender of an electronic item should warrant that the electronic item contains a record of the MICR line as it appeared on the original check at the time of truncation. This suggestion, however, would mean that if the check contained a MICR-line strip that omitted information previously encoded on the original check, only the information contained on the strip would be needed to satisfy the warranty. These comments were submitted prior to the Board's issuance of the final rule amending Regulation CC to implement the Check 21 Act, which requires the substitute check to contain information in all fields of the MICR-line that were encoded on the original check prior to truncation. 5 The purpose of the MICR-line content warranty for an electronic item derived directly from an original check is to ensure that the electronic item contains all the information necessary for the recipient to create a substitute check that is the legal equivalent of the original check. The Board therefore believes that it is appropriate for a bank to warrant that electronic item contains all the information required for a substitute check.

To address the foregoing issues with respect to the MICR line portion of the warranties made for electronic items, §§ 210.5(a)(4)(i) and 210.6(b)(3)(i) of the final rule state that the sender warrants that “the electronic image portion of the item accurately represents all of the information on the front and back of the original check as of the time that the original check is truncated” and “the information portion of the item contains a record of all MICR-line information required for a substitute check under § 229.2(aaa) of this chapter.”

C. Scope of recipients of warranties and indemnity for electronic items. Several commenters expressed concern that a Reserve Bank makes the warranties in existing and proposed § 210.6(b)(1) to a subsequent collecting bank, the paying bank, and any other payor, yet would make the new warranties and indemnity for electronic items in proposed § 210.6(b)(3) only to the bank to which the Reserve Bank transfers or presents the item. The Board notes that the scope of the supplemental warranties given by senders to Reserve Banks under § 210.5(a)(4) of the final rule is similarly limited. Commenters opined that the Reserve Banks should make the supplemental warranties and indemnity in § 210.6(b)(3) to the same parties that receive the warranties in § 210.6(b)(1).

Section 210.6(b)(1) generally restates existing warranties that Reserve Banks make under the U.C.C., which by the terms of that law flow to subsequent banks in the collection process. Proposed § 210.6(b)(3), by contrast, contains new warranties and an indemnity that Reserve Banks would not otherwise make under the U.C.C. or other law. The Board has retained the more limited scope of warrantees that receive the supplemental warranties for electronic items in § 210.6(b)(3). 6 A person that receives an electronic item derived directly from an original check from a person other than a Reserve Bank can further protect itself by an agreement with its sender.

D. Scope of sender and Reserve Bank warranties and indemnity for substitute checks and electronic items. To clarify the full range of warranties and indemnities that apply to items collected by Reserve Banks, the proposed rule listed the check collection warranties in § 229.34(c) of Regulation CC and the substitute check warranties and indemnity in subpart D of Regulation CC. The proposed amendments did not list other liability-related provisions of Regulation CC, such as the general liability provision and the interbank expedited recredit procedure that apply to substitute checks. Several commenters indicated that having a separate regulatory list of warranties and indemnities in Regulation J could cause confusion about how Regulation CC applies to checks handled by Reserve Banks or could suggest that the substitute check-related liability provisions that were not listed would not apply at all.

Many commenters expressed concern that proposed § 210.5(a)(5)(iv)-(v), by which the sender would agree to indemnify the Reserve Bank for losses associated with substitute checks (and representations thereof) and electronic items, respectively, inappropriately would allow a Reserve Bank to pass back losses for which the Reserve Bank was responsible. Commenters particularly were concerned that a Reserve Bank should not be allowed to pass back to a sender any losses that were attributable to the Reserve Bank's fault. The Board believes that the existing liability provisions of Regulation J, which hold a Reserve Bank liable for its own failure to use ordinary care, would have prevented this result. However, the Board notes that § 210.6(b)(3)(ii) of the proposed rule was overbroad because it would have required a Reserve Bank to indemnify the recipient for all its losses regardless of the recipient's fault.

Some of the commenters that were concerned about the equity of the liability structure in the proposed amendments suggested that a sender should not be liable for losses associated with electronic items that were later used to create substitute checks unless the sender breached one of the new warranties in Regulation J. Other commenters thought that any loss attributable to a problem with an electronic item should be passed back to the person that created the electronic item, regardless of whether that person or a subsequent bank in the collection process sent the electronic item to the Reserve Bank. 7

The Board intends that Regulation J acknowledge, but in no way alter, a bank's responsibilities under subpart D of Regulation CC for substitute checks and under § 229.34(c) for all checks. The Board further intends the liability for losses associated with electronic items to parallel the liability structure for substitute checks in Regulation CC as closely as possible, both for senders and for Reserve Banks, and to prevent any person from passing back losses attributable to its own fault. 8 The Board therefore has significantly reorganized the warranty and indemnity provisions in §§ 210.5 and 210.6 to address the comments on these topics and clarify the rule.

The final rule omits the proposed provisions that restated the existing Regulation CC liability structure and incorporates into other paragraphs of §§ 210.5(a) and 210.6(b) the concept that the Regulation CC warranty and indemnity provisions apply according to their terms. Specifically, § 210.5(a)(5)(ii)(A) provides that senders of original checks are not liable for any amount that the Reserve Bank pays under subpart D of Regulation CC for a subsequently created substitute check or under § 210.6(b) for an electronic item, absent the sender's agreement to the contrary. 9 Section 210.5(a)(5)(ii)(B) provides that nothing in Regulation J alters the liability structure that applies to substitute checks and paper or electronic representations of substitute checks under subpart D of Regulation CC. 10 Section 210.5(a)(5)(ii)(C) provides that a sender of an electronic item is not liable for any amount a Reserve Bank pays under § 210.6(b)(3) or subpart D of Regulation CC that is attributable to the Reserve Bank's own lack of good faith or failure to exercise ordinary care. Section 210.6(b)(3)(ii)(B) contains substantially similar limitations to those in § 210.5(a)(5)(ii)(C) so that Reserve Banks that handle an electronic item also will not bear substitute check-related losses that are attributable to the fault of a subsequent person in the collection process. The final rule also specifically states that Reserve Banks are subject to subpart D of Regulation CC.

The Board has not, as requested by commenters, amended the indemnity provisions to hold a sender of an electronic item liable for a loss associated with a later substitute check only if the sender breached a Regulation J warranty. The indemnity in subpart D of Regulation CC covers a loss due to the receipt of a substitute check even in the absence of a warranty breach. For example, a substitute check that contains a complete and accurate image of the original check may be insufficient to prove a forgery claim because only the original check could be used for handwriting analysis. Subpart D of Regulation CC would allocate that loss to the reconverting bank. Sections 210.5(a)(5) and 210.6(b)(3) of the final rule further allocate that loss to the first party subject to Regulation J that sent the electronic item, which could be the bank that sent the electronic item to the Reserve Bank or the Reserve Bank itself. Thus, Regulation J places the loss with the bank whose choice to handle an item electronically necessitated the later creation of a substitute check.

The final rule also does not, as requested by commenters, allocate losses associated with an electronic item to a person that handled the item prior to the Reserve Bank's sender. The warranties and indemnity in existing and proposed Regulation J are first made by the sender of the item to a Reserve Bank because Regulation J only governs items that are collected by the Reserve Banks. The Board believes that allocating liability for any item in Regulation J to a person prior to the Reserve Bank's sender would be inappropriate, because that person may have no control over whether the item was handled by a Reserve Bank. However, a Reserve Bank's sender that received an electronic item from another person could protect itself through its agreement with that person.

E. Procedures for claims against Reserve Banks. Several commenters opined that the standard for accrual of a claim for an electronic item that is not a representation of a substitute check in § 210.6(d)(2) should be the same as the accrual standard for substitute check claims in § 229.56(c) of Regulation CC. This is the result intended by the Board, and proposed § 210.6(d)(2) reached this result by using language identical to that in § 229.56(c). The final rule therefore retains the proposed accrual language.

Some commenters expressed concern that the statement in § 210.6(d)(3) of the proposed rule that paragraph (d) “does not lengthen” the time for bringing a claim under Regulation CC implied that paragraph (d) could shorten the otherwise applicable timeframe. The final rule therefore states that § 210.6(d) “does not alter” the time periods for bringing actions under the sections of Regulation CC that it references.

Section 210.12 sets forth a liability structure for returned checks that is substantially similar to the liability structure in §§ 210.5 and 210.6 that applies to items handled for forward collection. The proposed amendments to § 210.12 therefore closely paralleled the proposed amendments to corresponding portions of §§ 210.5 and 210.6. Accordingly, the final amendments to § 210.12 are identical or substantially similar to those discussed in the analysis §§ 210.5 and 210.6.

The Board has reviewed the final rule's impact on small banks in accordance with the final regulatory flexibility analysis requirements in the Regulatory Flexibility Act (12 U.S.C. 604).

Under section 3 of the Small Business Act, as implemented at 13 CFR part 121, subpart A, a bank is considered a “small entity” or “small bank” for purposes of the Regulatory Flexibility Act if it has $150 million or less in assets. Based on June 2004 call report data, the Board estimates that there are approximately 14,221 depository institutions with assets of $150 million or less. The final amendments will apply to all depository institutions, regardless of size, that obtain check collection services from a Reserve Bank.

As discussed in the preceding sections, the final amendments are necessary to facilitate the electronic collection of checks by Reserve Banks as contemplated by the Check 21 Act. Commenters generally supported the proposed amendments and did not submit comments on the Regulatory Flexibility Act section. The primary effect of the final amendments is to provide that each bank that sends an electronic item to a Reserve Bank for forward collection or return would make warranties and an indemnity for that item. The new warranties and indemnity in Regulation J are similar to the warranties and indemnity that apply to paper checks under existing Regulation J and other law. Although the Reserve Banks could protect themselves with respect to electronic items by agreement, the Board believes that it is appropriate at this time to bring electronic items within the coverage of Regulation J. The final amendments generally apply only to those banks that choose to send items to Reserve Banks electronically. These amendments do not require any bank to change the form in which it submits checks, nor do they require any bank to submit reports, maintain records, or provide notices or disclosures.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board has reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no new collections of information and proposes no substantive changes to existing collections of information pursuant to the Paperwork Reduction Act.

The Board has found good cause that the final amendments should take effect on October 28, 2004. The Check 21 Act takes effect on that date and is designed to facilitate the electronic processing of checks. Without a warranty and indemnity structure for electronic items derived directly from original checks, such as that in the final amendments, the Reserve Banks cannot offer a wider range of electronic check processing services as anticipated by the Check 21 Act. To maximize banks' ability to use the Federal Reserve's new electronic check processing services facilitated by the Check 21 Act, the effective date of Regulation J should coincide with the effective date of the Act. Moreover, the Board notes that no bank is required to change its check processing procedures as a result of the rule and that the new provisions of the final rule generally apply only to those banks that choose to send items electronically to the Reserve Banks. The final rule also does not impose any reporting, recordkeeping, or reporting requirements for any bank. Accordingly, having the amendments take effect on October 28 should provide benefits to those banks that want to rely on the Check 21 Act to process checks electronically without any countervailing disadvantages to those or any other banks. For the foregoing reasons, the Board has determined that good cause exists for making the rule effective on October 28, 2004, to coincide with the effective date of the Check 21 Act.

On June 24, 2004, the NCUA Board requested comment on proposed changes to § 701.14 of its regulations, clarifying the procedures that newly chartered or troubled federally-insured credit unions must follow to obtain NCUA approval before adding or replacing board or committee members or changing the duties of a senior executive officer. 69 FR 39871 (July 1, 2004). The proposed amendments clarify the relationship between the prior notice provision and the commencement of service provision in the current rule to eliminate confusion and reorganize the requirements to make the rule easier to understand.

NCUA received comments regarding the proposed changes from two federal credit unions, two national credit union trade associations, one state credit union trade association and one state credit union supervisory association, for a total of six comments.

The comments were generally favorable and supportive of the amendments, and all but one commenter supported the efforts to clarify and reorganize the provisions of the rule. Two commenters supported the proposal as published without recommending any changes.

One commenter recommended that the revised rule include a specific reference to the role of the state supervisory authority (SSA) in cases involving state-chartered credit unions. The rule, however, implements authority in the Federal Credit Union Act specifically authorizing the NCUA to review and approve of the service of certain senior credit union officials and employees of federally-insured credit unions, including credit unions that are state-chartered. 12 U.S.C. 1790a. While the NCUA is the decision maker in these cases, the current rule does require a state-chartered, federally-insured credit union to provide a copy of the NCUA notice to its SSA. 12 CFR 701.14(d)(1). In addition, the Board notes that another provision of our regulations also requires NCUA to consult with the appropriate SSA and provide it with notice concerning NCUA's decision. 12 CFR 741.205. The Board has not adopted this recommendation to otherwise reference the role of SSAs.

Another commenter suggested that the rule provide that a request for approval of an official's or employee's service to be deemed complete unless the regional office specifically requires additional information within ten days of its receipt of the request.

The current rule provides that the appropriate NCUA regional office will notify the credit union within ten days of its receipt of the request for approval either that the request is complete or that additional information is required and the Board is not aware of any instances of problems with the current procedure. The final rule retains this provision. The rule already calls for the regional office to advise the credit union about whether the request is complete and providing an automatic determination that an application is deemed complete within ten days could create confusion with the provision in the rule providing for automatic approval if a Regional Director fails to issue a written decision within thirty days. In addition, the suggested revision could, in fact, delay processing. A regional office may determine that it wants to provide an applicant with an opportunity to supplement a submission after performing an initial review. A credit union will generally be willing to provide additional information if it is able since failure to do so would likely result in the disapproval of its request.

One commenter suggested that NCUA exclude service by employees from coverage of the rule. This commenter contends that selection and oversight of employees should be the exclusive province of the board of directors, absent some indication that the board has behaved unethically or is responsible for the credit union's unhealthy financial condition. The authority in the FCU Act for this rule specifically addresses senior executive employees as well as board and committee members. 12 U.S.C. 1790a(a). Senior executives are directly involved in and are responsible for the day-to-day operation of a credit union, and the Board believes their competence is as critical as that of the elected officers and board members. Accordingly, the Board has not adopted this recommended change.

One commenter noted its opposition to the proposal, contending that the current rule permits an officer or senior executive employee to commence service on an interim basis until such time as the credit union is notified in writing of NCUA's determination to disapprove such service. The commenter has mistakenly characterized the current rule, which only permits such interim service if NCUA grants a waiver from the otherwise mandatory thirty-day notice. The proposed amendments preserve the ability of a credit union to seek a waiver from the advance notice requirements in those cases in which the circumstances may warrant service to begin immediately. The final rule clarifies any ambiguity in the current rule between the operation of the prior notice and commencement of service provisions in the rule. The final rule retains the waiver provisions that provide sufficient flexibility where circumstances warrant immediate service yet permits the regional offices to conduct the review contemplated by the Federal Credit Union Act.

In view of the comments, NCUA is adopting the proposed amendments as a final rule without change.

The Regulatory Flexibility Act (RFA) requires NCUA to prepare an analysis to describe any significant economic impact any proposed regulation may have on a substantial number of small entities. NCUA considers credit unions having less than ten million dollars in assets to be small for purposes of RFA. Interpretive Ruling and Policy Statement (IRPS) 87-2 as amended by IRPS 03-2. The amendment clarifies the relationship between the waiver of prior notice provision and the temporary service provision, so as to eliminate any potential confusion. The NCUA has determined and certifies that this amendment will not have a significant economic impact on a substantial number of small credit unions. Accordingly, the NCUA has determined that a Regulatory Flexibility Analysis is not required.

NCUA has determined that this amendment would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget (OMB). NCUA currently has OMB clearance for § 701.14's collection requirements (OMB No. 3133-0121).

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The amendment will apply to all federally-insured credit unions. NCUA has determined that the amendment will not have a substantial direct effect on the States, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this amendment does not constitute a policy that has federalism implications for purposes of the executive order.

NCUA has determined that this amendment will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has determined that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

A. Background

In 2003, NCUA amended its MBL rule and other rules related to business lending to enhance credit unions' ability to meet their members' business loans needs. 68 FR 56537 (October 1, 2003). In addition to comments on those amendments, NCUA received other suggestions on how it could improve the MBL rule. Among the most significant of these, commenters suggested NCUA amend the MBL rule “so that it could be better aligned with lending programs offered by the Small Business Administration,” such as the SBA's Basic 7(a) Loan Program. Id. at 56538. While NCUA recognized the merits of this suggestion, NCUA could not include it in the final rulemaking because it addressed issues outside the scope of the rulemaking. The Administrative Procedure Act generally prohibits Federal Government agencies from adopting rules without affording the opportunity for public comment. 5 U.S.C. 553. NCUA noted in the final rule, however, that it would review this suggestion to determine if it would be appropriate to act on it in a subsequent rulemaking.

As a result of that review, NCUA issued a proposed amendment to its MBL rule in June 2004 to permit credit unions to make SBA guaranteed loans under SBA's less restrictive lending requirements instead of under the more restrictive MBL rule's lending requirements. 69 FR 39873 (July 1, 2004). NCUA reviewed the SBA's loan programs in which credit unions can participate and determined they provide reasonable criteria for credit union participation and compliance within the bounds of safety and soundness. Additionally, these SBA programs are ideally suited to the mission of many credit unions to satisfy their members' business loans needs.

NCUA noted in the proposal that it recognizes NCUA's collateral and security requirements for MBLs, including construction and development loans, are generally more restrictive than those of the SBA's guaranteed loan programs and could hamper a credit union's ability to participate fully in SBA loan programs. As a result, the MBL rule's collateral and security requirements could prevent a credit union from making a particular loan that it could otherwise make under SBA's requirements. NCUA issued the proposal to provide relief from these more restrictive requirements and to help enable credit unions to better serve their members' business loans needs.

NCUA discussed in the proposal that its Office of General Counsel in Legal Opinion 03-0911, dated May 20, 2004, clarified that NCUA's general lending rule and the Federal Credit Union Act (Act) permit federal credit unions (FCUs) to make MBLs under the terms of the SBA's guaranteed loan programs to the extent the terms and conditions under which the guarantee is provided are consistent with the requirements and limitations in the MBL rule. 12 CFR 701.21(e); 12 U.S.C. 1757(5)(A)(iii). Specifically, the opinion identified loan maturity limits, usury ceilings and prepayment penalties as terms of the SBA's guaranteed loan programs that an FCU could use in lieu of corresponding terms in NCUA's rules. The opinion stated, however, that a credit union could not rely on the exception for government guaranteed loan programs in NCUA's general lending rule and the Act with regard to collateral requirements for MBLs. 12 CFR 701.21(e); 12 U.S.C. 1757(5)(A)(iii). The opinion explained the MBL rule expressly sets collateral requirements for MBLs in the form of maximum loan-to-value ratios. The collateral requirements of the SBA's guaranteed loan programs are not consistent with those of the current MBL rule and, therefore, cannot be used. The proposed amendments to the MBL rule remove that impediment by exempting SBA guaranteed loans from the MBL rule's collateral requirements.

The proposal also noted that there could be circumstances where a business loan made under an SBA loan program would not be subject to the MBL rule. For example, a $40,000 business loan with an SBA guarantee to a member who has no other loans with the originating credit union would be too small to meet the definition of an MBL. Thus, the credit union in this example can rely on the authority provided by § 701.21(e) of NCUA's rules and make a business loan as part of an SBA loan program under all of the terms and conditions required or permitted by the program.

The MBL rule applies to all FCUs and to most federally-insured state credit unions (FISCUs). The proposal noted that a FISCU is exempt from the MBL rule only if, after August 7, 1998, the enactment of the Credit Union Membership Access Act (CUMAA), Public Law 105-21, its state supervisory authority (SSA) has adopted its own business loan rule, with the approval of the NCUA Board, for use instead of NCUA's MBL rule. The amendments regarding collateral requirements apply to all credit unions subject to the MBL rule, but it is important to note that legal opinion OGC 03-0911 applies only to FCUs, not FISCUs. FISCUs follow state law and regulation with respect to loan maturity, interest rate and prepayment penalties. For those issues, the relationship between any state law limitations and SBA's requirements should be determined by FISCUs in consultation with their state supervisory authority.

Finally, the proposal noted that, while NCUA believes many credit unions would greatly benefit from participating in SBA programs, NCUA also believes that programs of this type can create some additional safety and soundness concerns. For example, the loans being guaranteed are often riskier than other loans made by credit unions, and most credit unions would not make these kinds of loans without the security the SBA guarantees provide. NCUA noted it is aware that SBA guarantee programs generally place stringent requirements on participating lenders to comply with program requirements or face losing the guarantee. Accordingly, the proposal recommended that, before a credit union becomes a participating lender, it makes certain it fully understands the terms of the program and has procedures in place to assure its compliance with all program requirements.

NCUA received twenty-four comment letters regarding the proposed rule: four from FCUs, three from state credit unions, one from a private individual, seven from credit union trade organizations, one from a credit union service organization, one from a certified development company, one from a certified development company trade organization, one from a professional association representing state and territorial regulatory agencies, one from a bank, and four from banking trade organizations. All commenters supported the proposal except the bank and banking trade organizations.

Many of the commenters supporting the proposal also offered additional comments. For example, seven commenters asked NCUA to clarify that the proposal applies to SBA's Certified Development Company (504) Loan Program in addition to SBA's Basic 7(a) Loan Program. NCUA confirms the proposal applies to the 504 Loan Program and highlights that the proposal expressly states it applies to MBLs made as part of an SBA guaranteed loan program.

Four commenters suggested NCUA expand the scope of the proposal to include other government guaranteed loan programs. Three of them specifically named the Farm Service Agency or United States Department of Agriculture loan programs. Two of them suggested all government guaranteed loan programs be included. As noted in the preamble to the proposal, NCUA is willing to consider other government guaranteed loan programs as it becomes apparent there is demand for the program among credit unions.

Two commenters suggested NCUA reference Part 702 Prompt Corrective Action (PCA) in § 723.4 of the MBL rule to indicate PCA applies to member business lending. These commenters also stated it is burdensome for credit unions to have to track and report MBLs differently for different purposes. Specifically, they noted credit unions must do this when calculating net member business loan balances (NMBLB) under the MBL rule and risk-based net worth (RBNW) requirement under PCA. One of these commenters asked NCUA to explore ways of minimizing this burden. The other suggested using the NMBLB for purposes of calculating the RBNW requirement and permit credit unions to exclude MBLs that have been paid down below $50,000 from the calculation of the RBNW requirement. Part 702 is currently referenced in § 723.1 but not in § 723.4. NCUA is including a reference to part 702 in § 723.4 in the final rule. While NCUA recognizes there is some degree of inconvenience associated with tracking and reporting MBLs differently when calculating NMBLB and RBNW, NCUA believes the risks associated with making MBLs necessitate this form of accounting. Additionally, this system helps preserve the flexibility a credit union has to exclude MBLs from its NMBLB when they have been paid down below $50,000.

Three commenters asked NCUA to clarify how an SBA loan term could be both less restrictive than an NCUA requirement and still consistent with the MBL rule. This is possible when an SBA term is less restrictive than an NCUA requirement that is not specifically addressed in the MBL rule. For example, maturity limits are not specifically addressed in the MBL rule but are in the Act and elsewhere in NCUA's regulations.

The bank and four banking trade organizations opposed the proposal stating, among other things, it contradicts congressional intent to limit credit unions' ability to make MBLs. NCUA disagrees. The proposal does not increase any congressional limits on the kind or amount of MBLs a credit union may make. Moreover, the legal authority allowing credit unions to make MBLs under the terms of an SBA guaranteed loan program is in the Act and, therefore, directly reflecting congressional intent. Finally, congressional representatives have urged NCUA to use its authority, conferred by Congress, to facilitate MBL lending and to refrain from imposing any limitations on credit unions in this context not explicitly called for by Congress in CUMAA. 68 FR 56537, 56538 (October 1, 2003).

Accordingly, except for technical amendments, NCUA adopts the proposed amendments to part 723 as final without change.

The MBL rule uses the phrase “net member business loan balance” to describe the outstanding loan balance plus any unfunded commitments reduced by a number of factors. Section 723.10(h) uses the phrase “outstanding member business loan balance” instead of “net member business loan balance.” This inconsistent use of language was inadvertent and is corrected by amending § 723.10(h) to read “net member business loan balance.”

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small credit unions (those under ten million dollars in assets). This rule permits credit unions to more fully participate in SBA loan programs, without imposing any additional regulatory burden. The final rule would not have a significant economic impact on a substantial number of small credit unions, and, therefore, a regulatory flexibility analysis is not required.

NCUA has determined that the final rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. This final rule would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order.

The NCUA has determined that this final rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by section 551 of the Administrative Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has determined that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to various transport category airplanes on which cargo restraint strap assemblies have been installed per STC ST01004NY was published as a supplemental notice of proposed rulemaking (NPRM) in the Federal Register on August 4, 2004 (69 FR 47028). That action proposed to require revising the airplane flight manual (AFM) to include a procedure for discontinuing the use of certain cargo restraint strap assemblies installed per STC ST01004NY, if used as the only cargo restraint. That action also proposed to add a requirement to revise the airplane weight and balance manual (WBM) to include the same procedure described previously.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.

The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

There are approximately 1,150 transport category airplanes of the affected design in the worldwide fleet. We estimate that 735 airplanes of U.S. registry will be affected by this AD.

It will take approximately 1 work hour per airplane to accomplish the AFM revision, at an average labor rate of $65 per work hour. Based on these figures, the cost impact of the AFM revision on U.S. operators is estimated to be $47,775, or $65 per airplane.

It will take approximately 1 work hour per airplane to accomplish the WBM revision, at an average labor rate of $65 per work hour. Based on these figures, the cost impact of the WBM revision on U.S. operators is estimated to be $47,775, or $65 per airplane.

The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the proposed requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.

For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES .

We have recently received a report indicating that wear of the fuselage skin was found between body stations 860 and 1006 on a Boeing Model 737-300 series airplane. Subsequently, an 18-inch crack developed in the area of the wear. Fuselage skin wear is attributed to the movement of the blade seals, which provide an aerodynamic seal between the dorsal fin fairing and the fuselage skin. Wear damage of the fuselage skin, if not found and fixed, could result in fatigue cracking due to cabin pressurization, and consequent rapid in-flight decompression of the airplane fuselage.

We have reviewed Boeing Message Number 1-QXO35, dated October 13, 2004. The message describes procedures for repetitive detailed inspections of the fuselage skin under the dorsal fin assembly for discrepancies ( i.e. , wear or cracking), and contacting Boeing for repair instructions. The message also describes procedures for accomplishing a detailed inspection for discrepancies if any repair doubler is installed.

We have also reviewed Boeing Service Bulletin 737-55-1057, Revision 1, dated July 22, 1999; specified in the Boeing message as an additional source of service information for accomplishing the actions. Part I of the Accomplishment Instructions of the service bulletin describes procedures for inspecting for discrepancies of the fuselage skin under the dorsal fin assembly. The discrepancies include chafing, wear damage, and lack of abrasion-resistant coating.

The unsafe condition described previously is likely to exist or develop on other airplanes of the same type design. Therefore, we are issuing this AD to find and fix discrepancies of the fuselage skin, which could result in fatigue cracking due to cabin pressurization, and consequent rapid in-flight decompression of the airplane fuselage. This AD requires accomplishing the actions specified in Boeing Message Number 1-QXO35, described previously, except as discussed under “Difference Between the AD and Boeing Message Number 1-QXO35.”

The message specifies that operators may contact the manufacturer for repair instructions, but this AD requires you to repair cracking in one of the following ways:

• Using a method that we approve; or

• Using data that meet the type certification basis of the airplane, and that have been approved by a Boeing Company Designated Engineering Representative who has been authorized by the FAA to make those findings.

Although the message recommends reporting any fuselage skin cracking found during the detailed inspections, this AD does not require that action.

An unsafe condition exists that requires the immediate adoption of this AD; therefore, providing notice and opportunity for public comment before the AD is issued is impracticable, and good cause exists to make this AD effective in less than 30 days.

This AD is a final rule that involves requirements that affect flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any relevant written data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2004-19461; Directorate Identifier 2004-NM-169-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the AD. We will consider all comments received by the closing date and may amend the AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this AD. Using the search function of our docket Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc. ). You can review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you can visit http://dms.dot.gov .

We are reviewing the writing style we currently use in regulatory documents. We are interested in your comments on whether the style of this document is clear, and your suggestions to improve the clarity of our communications with you. You can get more information about plain language at http://www/faa.gov/language and http://www.plainlanguage.gov

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that the regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a regulatory evaluation of the estimated costs to comply with this AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

The FAA proposed to amend 14 CFR Part 39 with an AD for certain Raytheon (Beech) Model MU-300-10, 400, 400A, and 400T series airplanes; and certain Raytheon (Mitsubishi) Model Beech MU-300 airplanes. The proposed AD was published in the Federal Register on July 22, 2004 (69 FR 43783), to require a one-time inspection of certain panels in the spoiler mixer bay for the presence of drain holes, and the addition of at least one new drain hole; and a one-time inspection for discrepancies of the sealant on the relief cutout on the aft pressure bulkhead, and on certain baffles; and corrective actions if necessary.

We provided the public the opportunity to participate in the development of this AD. No comments have been submitted on the proposed AD or on the determination of the cost to the public.

We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed.

In paragraph (f) of the proposed AD we inadvertently referenced paragraphs (a)(1) and (a)(2) of the proposed AD; this is a typographical error. It was our intent to reference paragraphs (f)(1) and (f)(2). Paragraph (a) only references the comment due date and does not contain subparagraphs (1) and (2). Paragraph (f) of this final rule has been changed to correctly reference paragraphs (f)(1) and (f)(2) of this AD.

This AD will affect about 673 airplanes worldwide. The following table provides the estimated costs for U.S. operators to comply with this AD.

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866;

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a regulatory evaluation of the estimated costs to comply with this AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to GE CF6-80C2 turbofan engines with certain P/N HPT S2 NGVs installed. We published the proposed AD in the Federal Register on November 18, 2003 (68 FR 65000). That action proposed to require flex borescope inspections of certain P/N HPT S2 NGVs installed in CF6-80C2A1, -80C2A2, -80C2A3, -80C2A5, -80C2A5F, -80C2A8, -80C2B1, -80C2B1F, -80C2B2, -80C2B2F, -80C2B4, -80C2B4F, -80C2B5F, -80C2B6, -80C2B6F, -80C2B6FA, -80C2B7F, and -80C2D1F turbofan engines.

Examining the AD Docket: You may examine the AD Docket (including any comments and service information), by appointment, between 8 a.m. and 4:30 p.m., Monday through Friday, except Federal holidays. See ADDRESSES for the location.

We provided the public the opportunity to participate in the development of this AD. We have considered the comments received.

Seven commenters ask that we limit the inspections required by the proposed AD to those parts listed in paragraph 1.C.(6) of GE Service Bulletin (SB) No. CF6-80C2 S/B 72-0952, Revision 6, dated May 5, 2003, and that we revise Table 1 of the proposed AD to clarify the affected parts. The commenters state that those parts are the population recommended by the Manufacturer. We agree. We revised the applicability paragraph and Table 1 of the final rule for consistency with GE SB No. CF6-80C2 S/B 72-0952, Revision 6, dated May 5, 2003. We also clarified the applicability of certain P/Ns in Table 1 by adding, “Insert, P/N 1957M40G01 or P/N 1957M40G02, was installed during modification or repair,” to those parts.

Six commenters ask that we limit the inspections required by the proposed AD to areas of critical stress such as the leading edge and outer fillet areas of the HPT nozzle airfoil as specified in Paragraph 3.B.(3) of GE SB No. CF6-80C2 S/B 72-0952, Revision 6, dated May 5, 2003. The commenters feel that the proposed AD requires inspecting HPT blades as well as the nozzles, but that the cracking of the nozzles is the primary cause of failure of the HPT blade. The commenters feel that the proposed AD requires inspecting noncritical areas of nozzles. We agree. We revised paragraph (f) of the final rule to state “Flex-borescope inspect the NGVs following paragraphs 3.B.(3) through 3.B.(5) of the * * *.” We also deleted paragraphs (f)(1) through (f)(3)(ii) because they applied to HPT S2 NGVs that have not been repaired.

Five commenters ask that we provide an appropriate drawdown allowance for engines that have exceeded the threshold for the initial inspection, or provide credit for inspections that have already been done. The commenters feel that some engines might have already exceeded the initial limits. We agree that credit should be given for inspections that were performed before the effective date of the final rule, however, the proposed AD already provides for that credit by stating in paragraph (e) of the proposed AD “You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done”. We changed paragraph (f)(2) of the final rule to state “For engines listed in paragraphs (f)(1)(i) and (f)(1)(ii) of this AD that are already beyond the initial inspection thresholds, inspect at or before accumulating an additional 200 CSO after the effective date of this AD.”

Two commenters ask us to add the CF6-80C2B8F engine model to the Applicability. The commenters state that the engine model was in the SB before we issued the NPRM. We agree. We have added the CF6-80C2B8F engine model to the Applicability of the final rule.

Two commenters ask us to withdraw the NPRM because they do not feel there is an issue with safety of flight. One commenter states that they have not removed any engines for this cause. The other commenter states that the engine fragments that exited the engine via holes in the low pressure turbine case were small and caused only minor damage to the airplane. We do not agree. We identified an unsafe condition after an uncontained engine failure. We provided a discussion of the cause of the uncontained engine failure and how the condition could affect other engines of the same type design. We are issuing this AD to prevent future occurrences of the same unsafe condition.

One commenter asks us to change “blade failure” to “blade separation.” The commenter states this is consistent with using the term failure when the failure of the part is the primary cause. We agree. We have changed “blade failure” to “blade separation” in the final rule.

One commenter asks us to state the inspection compliance times for new nozzles in paragraph (f)(2)(i) through (iii) in terms of “CSN.” The commenter feels this will clarify the requirements. We agree that the change would have clarified the requirements of the original NPRM. However, based on previous comments, the final rule will apply only to repaired or modified nozzles and the paragraphs that the commenter asks us to change will not be included in the final rule.

Two commenters ask us to limit the reinspection requirements in paragraph (g) for the outer fillet to Figure 5, sheets 1 and 2 of GE SB No. CF6-80C2 S/B 72-0952, Revision 6, dated May 5, 2003. The commenters state that those sheets are the specific inspection requirements for cracking in the outer fillet. We agree. We added “Sheets 1 and 2” to paragraph (g) of the final rule.

Several commenters ask us to change the reinspection intervals that are incorporated by reference in paragraph (g). The commenters feel that the requirement to “reinspect at the next regular S2 Blade Inspection” as stated in Figure 5 of GE SB No. CF6-80C2 S/B 72-0952, Revision 6, dated May 5, 2003, might be misleading. Although the next regular S2 Blade Inspection should coincide with 250 cycles-since-last-inspection (CSLI) for CF6-80C2D1F engines with 5.0 or more cycles per flight leg and 400 CSLI for all other engines, the lack of specific cyclic limits might cause confusion. We agree. We added new paragraphs (h), (h)(1), and (h)(2) to the final rule to define the next regular S2 Blade Inspection as cyclic limits of 250 and 400 CSLI respectively.

Two commenters ask us to delete or change paragraph (h) of this AD, “Engines Operated as More than One Engine Model Configuration (Thrust Level).” Both commenters feel that we should delete paragraph (h) because the inspections are limited to repaired nozzles. One commenter also feels that we need a provision for engines that have operated at different thrust levels ( i.e., reconfigured from one model to another model) before the initial inspection. We agree. We changed paragraph (i) of the final rule to require performing the initial inspection at the lowest applicable inspection threshold, and reinspection intervals associated with the current engine model configuration.

We have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

There are about 1,100 GE CF6-80C2 turbofan engines of the affected design in the worldwide fleet. We estimate that this AD will affect 300 of these engines installed on airplanes of U.S. registry. We also estimate that it will take about 2 work hours per engine to perform the inspections on engines that exhibit no damage, and therefore require no mapping of damage, and that the average labor rate is $65 per work hour. Based on these figures, we estimate the total cost of this AD to U.S. operators to be $39,000.

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866;

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES . Include “AD Docket No. 2003-NE-43-AD” in your request.

Coast Guard District Commanders and Captains of the Port (COTP) must be immediately responsive to the safety and security needs within their jurisdiction; therefore, District Commanders and COTPs have been delegated the authority to issue certain regulations. Safety zones may be established for safety or environmental purposes. A safety zone may be stationary and described by fixed limits or it may be described as a zone around a vessel in motion. Security zones limit access to prevent injury or damage to vessels, ports, or waterfront facilities and may also describe a zone around a vessel in motion. Special local regulations are issued to enhance the safety of participants and spectators at regattas and other marine events. Regulated navigation areas establish regulations for vessels navigating within the area. Timely publication of these rules in the Federal Register is often precluded when a rule responds to an emergency, or when an event occurs without sufficient advance notice. The affected public is, however, informed of these rules through Local Notices to Mariners, press releases, and other means. Moreover, actual notification is provided by Coast Guard patrol vessels enforcing the restrictions imposed by the rule. Because Federal Register publication was not possible before the beginning of the effective period, mariners were personally notified of the contents of these special local regulations, security zones, safety zones or regulated navigation areas by Coast Guard officials; on-scene prior to any enforcement action. However, the Coast Guard, by law, must publish in the Federal Register notice of substantive rules adopted. To meet this obligation without imposing undue expense on the public, the Coast Guard periodically publishes a list of these temporary special local regulations, security zones, safety zones and regulated navigation areas. Permanent rules are not included in this list because they are published in their entirety in the Federal Register . Temporary rules are also published in their entirety if sufficient time is available to do so before they are placed in effect or terminated. The safety zones, special local regulations, security zones and regulated navigation areas listed in this notice have been exempted from review under Executive Order 12866, Regulatory Planning and Review, because of their emergency nature, or limited scope and temporary effectiveness.

The following rules were placed in effect temporarily during the period from July 1, 2004, through September 30, 2004, unless otherwise indicated.

In a proposed rule published in the Federal Register on April 19, 2004 (69 FR 20841), the Postal Service proposed an amendment to Domestic Mail Manual (DMM) standards governing material eligible for mailing at Standard Mail postage rates. The Postal Service adopts the proposal, with modifications, for the reasons explained below.

As discussed in the proposal, Postal Service standards for First-Class Mail and Standard Mail are based, in part, on laws enacted by Congress and the specifications in the Domestic Mail Classification Schedule (DMCS). These DMCS standards specify that printed material weighing less than 16 ounces may be sent as Standard Mail if it is not required to be entered as First-Class Mail. Generally, mail wholly or partially in handwriting or typewriting, mail sealed against postal inspection, material having the character of actual and personal correspondence, and bills and statements of account must be mailed as First-Class Mail or Express Mail.

Printed material, much of which is prepared by computer, often qualifies at Standard Mail rates, but not always. If it includes personal information, printed material may have the character of actual and personal correspondence and be subject to First-Class Mail rates. However, under certain limited conditions, printed material containing personal information may be eligible for Standard Mail rates.

Over the last several years this provision has become more significant as advances in technology enabled mailers to increase the amount of “personal information” in computer-generated mailings, including advertising material typically entered as Standard Mail. In turn, this change has led to questions whether these mailings, including tax mailings, warranty information, proxy materials, financial services mailings such as credit card and equity loan advertisements, and others, would qualify as Standard Mail. As a result, in response to requests from postal customers for greater clarity on Standard Mail eligibility, the Postal Service determined to undertake this rulemaking.

The main focus of the proposal was the adoption of more explicit guidance—a “bright line”—concerning the inclusion of personal information in Standard Mail. Other eligibility standards are left substantively unchanged, although they were reorganized for clarity and to better describe postal services.

Clarifying the circumstances in which personal information may be included in Standard Mail is important for both the Postal Service and its customers. All parties—the Postal Service, mailers, and mail recipients—benefit from the provision of services that are fairly priced and secure. Customers need certainty in the prices they will pay for their mail, for budgeting and planning. Customers also need assurance that they are charged the same prices as other customers are charged for similar mail. From a postal perspective, consistent administration of mail acceptance and classification is a vital concern, and it is critical that all customers pay the proper rate of postage on their mail.

Nevertheless, the Postal Service recognizes that it does not have unlimited rulemaking discretion in this area. The Domestic Mail Manual standards must be consistent with the provisions in the DMCS. Those provisions are established under procedures set forth in the Postal Reorganization Act and require a recommendation from the independent Postal Rate Commission (PRC) following a Postal Service request to effect changes. Therefore, while some commenters suggested radical revisions to the standards in this area, these revisions in many cases would require DMCS changes not contemplated in this rulemaking. Other commenters raised issues that are beyond the scope of this rulemaking and are not addressed here, such as comments concerning the procedures for issuing administrative decisions or disclaimers regarding solicitations in the guise of bills, invoices, or statements of account required by 39 U.S.C. 3001(d)(2)(A).

This rulemaking is the first on this subject since the Postal Service created standards in the early 1980s recognizing technological advancements that permitted the inclusion of personal information in advertising material historically sent as Standard Mail. Before that rulemaking, the inclusion of any personal information in a mailpiece caused its classification as First-Class Mail. The examples that motivated that rulemaking involved instances where the only reason for inclusion of the personal information in the mailpiece was to support advertising or a solicitation for funds to a charitable organization. As explained in the proposal, the Postal Service continues to stand by the principles underlying that rulemaking and the policy that these advertising or solicitation mailings should be entitled to entry at Standard Mail rates.

The mailpieces that have prompted concerns among mailers and the Postal Service are those that contain personal information that is included for a reason other than the support of advertising or a charitable solicitation. In some cases, the personal information supports an advertisement or solicitation but is also included for other reasons. And, in other cases, the personal information is not included to support an advertisement or solicitation, but is included only for other purposes. As an example, a mailpiece might convey to an addressee the specific terms of an insurance policy to which the addressee recently subscribed, such as the premiums, coverage, and policy conditions. This is personal information and is conveyed to the addressee to confirm the coverage he or she purchased. Similar mailpieces also might include a request that the addressee consider purchasing additional coverage.

Another example might involve a firm that sells radios, computers, and clocks. The firm mails a warranty to customers who purchased computers. The mailing includes personal information that specifies the computer by model number, serial number, price, manufacturer, and date of purchase, and also features specific warranty provisions applicable to the product. The mailpiece advises the addressee/purchaser to retain the correspondence for his or her records. The specific information in the mailpiece associating the addressee to his or her computer purchase is considered personal information. Some of the firm's mailings also include advertising for radios, clocks, and other products sold by the firm.

Consistent with the principles underlying the rulemaking in the 1980s, the Postal Service believes it vital to consider the purposes for which personal information is included in a mailpiece. Where the personal information is included solely to support an advertisement or charitable solicitation, the mail will not be considered to have the character of actual and personal correspondence and may be eligible for Standard Mail rates (assuming it meets other applicable standards). In contrast, where the personal information is included for other purposes—rather than only to support a related advertisement or solicitation—the mailpiece will be considered to have the character of actual and personal correspondence and will not be eligible for Standard Mail rates. Accordingly, in the examples discussed above, the personal information is included to support purposes other than advertising, either in whole or in part, and the mailpieces are properly classified as First-Class Mail.

The Postal Service received 402 written comments in response to its proposal, including several that were received late but were considered. The commenters were diverse, including approximately 350 nonprofit organizations and organizations representing such organizations; Congressional representatives; private individuals; advocacy and political campaign constituencies; financial industry representatives; Periodicals industry representatives; and commenters concerned about privacy issues.

Nearly all comments agreed with the Postal Service's goal to provide clearer guidance when mail containing personal information may be entered as Standard Mail. There were a variety of views on the effectiveness of the proposed changes, and many commenters suggested improvements. A small number suggested that the proposal be withdrawn and a new proposal considered, possibly following discussions with mailer groups. The Postal Service has carefully considered these comments and, in some respects, has modified the proposed rule. In other areas of concern, we are providing a more thorough explanation in this final rule or in other publicly available rulings, such as Customer Support Rulings (CSRs) on Postal Explorer (http://pe.usps.gov). Since we believe that these actions satisfy the concerns expressed by commenters, we find that it is not necessary to withdraw the proposal and initiate a further rulemaking process.

Many commenters expressed concern that application of the proposed “exclusive purpose” test could cause mailings to be classified as First-Class Mail because of the inclusion of nonpersonal information in the mailpiece. This concern was most often expressed by nonprofit organizations and their representatives, who explained that many nonprofit mailings contain educational or other purely informational material in addition to solicitations for donations. These comments are well taken. Upon reviewing the proposal, the Postal Service agrees that a literal application of the proposed standard might result in unintended consequences and has determined to revise the language.

For example, assume a mailpiece entered by an authorized nonprofit organization included a cover letter seeking donations from members. The letter lists the member's donation from the previous year, which is considered personal information, and urges the member to double the amount this year. The only purpose for the personal information (the amount of the previous donation) is to support the solicitation for donations. However, also included in the mailpiece is a preprinted flyer outlining the extent of famine conditions internationally and explaining the organization's recent efforts concerning disaster relief. The purpose of this flyer is, at least in part, educational.

The Postal Service believes this mailpiece, as described, should be eligible for Standard Mail rates, since the inclusion of purely nonpersonal, informational printed material should not disqualify it from the use of Standard Mail rates. However, that conclusion would be open to question under a literal application of the proposed rule, particularly proposed E610.3.1c, which considers whether the exclusive purpose of the “mailpiece” is advertising or a solicitation of donations.

Although the Postal Service agrees that the concerns raised by nonprofits have merit, it has determined to adopt a different remedy than suggested. The remedy proposed by these commenters would apply only to nonprofit organizations. The Postal Service believes that excluding other mailers is inappropriate, since the inclusion of purely nonpersonal, informational material should not disqualify other mailers from using Standard Mail rates.

Additionally, some commenters suggest a test where advertising or solicitation must be the primary (rather than the exclusive) purpose of the mailing. We believe that this test would be difficult to administer. In the example of the nonprofit mailing above, how would we determine the primary purpose of the mailpiece? Additionally, we find that a primary purpose test is unnecessary, if not inappropriate, in this context, because the amount of purely nonpersonal, printed informational material should not disqualify a mailpiece from the use of Standard Mail rates. In short, we do not believe the classification of a mailpiece should hinge on whether the solicitation or provision of nonpersonal information is the primary purpose of the mailpiece, as long as all personal information is included only to support the advertising or solicitation content.

This approach is consistent with the principle underlying the early 1980s rulemaking. Thus, in the nonprofit example described above, if the only purpose for including the personal information is to support a solicitation for donations, the inclusion of the personal information should not cause the piece to be classified as First-Class Mail. Further, the inclusion of purely nonpersonal educational or other informational content in the mailpiece should not disqualify the mailpiece from entry at Standard Mail rates, regardless of the amount of such information or its ratio to the amount of advertising content, subject to applicable weight limits for Standard Mail. Accordingly, we are deleting proposed E610.3.1c and substituting the following: “The exclusive reason for inclusion of all of the personal information is to support the advertising or solicitation in the mailpiece.”

Many of the remaining comments on the proposed rule center on two themes: a concern that the proposed rule will be difficult to administer or result in inconsistent decisions, and proposals for “safe harbors” for the mail of specific industries. The financial industry, represented by seven commenters, requested a safe harbor for certain types of financial services mail, such as offers with terms or pricing that include pre-approved offers for credit and insurance. Another financial industry commenter requested a safe harbor for mailings required by regulations of other federal agencies. “[C]hanges to the Title 12—Banks and Banking regulations that have resulted in written notification to customers. * * *” is cited as the example. Representatives of authorized Nonprofit Standard Mail mailers offered a similar suggestion, proposing to permit the inclusion of personal information in nonprofit mail if it “advances one or more qualifying purposes of the organization.”

A small number of commenters representing an election campaign constituency claim that they are the subject of discrimination, on the basis that commercial mailings may be eligible for Standard Mail rates while sample ballots and other political campaign mail containing personal information is not. They support the intent of the proposed revisions as they affect commercial mailings but express the opinion that election campaign mail does not fit into the same category and any revisions “should specifically exempt political mail.”

The Postal Service does not believe it proper, nor believe itself authorized, to create “safe harbors” for the mail of particular mailers, particular industries, or types of customers. The standards in the Domestic Mail Manual must be consistent with the DMCS and applicable statutes. The DMCS creates general standards and does not suggest that certain types of mail or mailers be excepted from standards. This principle also is consistent with the Postal Reorganization Act, which prohibits the Postal Service (except where statutorily authorized) from undue or unreasonable discrimination among mailers in the provision of services ( see 39 U.S.C. 403(c)).

Moreover, even if the Postal Service had the authority to create “safe harbors,” their adoption could create the type of administrative concerns that motivated this rulemaking. We would need to define the safe harbors and then apply the standards to determine whether a mailing meets that category. For example, if we adopted a safe harbor for financial services mailings containing personal information, we must define “financial services” mail, and then determine whether specific mailings fell within that definition. We believe that this determination would cause significant administrative problems.

For similar reasons, permitting personal information that supports the mission of a nonprofit mailer would be difficult to administer. Acceptance decisions as to the nature of the mission of a nonprofit organization and whether the use of personal information “supports” that mission could become highly subjective and lead to inconsistencies and contested eligibility for nonprofit rates. We have also decided not to adopt the suggestion of mailers who, concerned with consistent application of the proposed standard, propose a definitive list of specific types of information or mailings required to be sent as First-Class Mail. We believe that such a list would decrease the amount of mail eligible for Standard Mail rates. Moreover, we believe that it would create, and not ease, administrative concerns. First, since the business of our customers continues to evolve, the Postal Service would have to continuously review and revise the list, eliminating the certainty the list was intended to create. Second, as explained above in a different context, the Postal Service would have to define each item and apply it to an individual mailing. Again, we believe that this effort would lead to significant administrative problems.

A number of commenters also expressed concern with the proposed “purpose” test, believing it might lead to inconsistent decisions. We disagree. An “exclusive purpose” test should be much more consistently applied than a “primary purpose” test; there is no need to weigh various purposes against each other to determine which is predominant or “primary.” Instead, the only issue is whether there is a purpose for inclusion of the personal information other than the support of an advertisement or solicitation.

Other commenters expressed concern about how postal employees will discern such a purpose, apparently believing that employees will attempt to do so based on their perception of the mailer's intent, by “reading the mind” of the mailer. If we were asking this task of employees we would recognize that the commenters raised a valid concern. However, employees will not attempt to make a subjective determination of the mailer's intent. As explained in the proposal, employees will be trained to “make a determination of mailpiece eligibility based on the mailpiece itself” ( see 69 FR 20843). Employees will not attempt to “read the mailer's mind” or make decisions based on their personal knowledge or belief as to the mailer's intention, but will make decisions based on the specific contents of the mailpiece.

For example, a recent case involved summaries of expenditures over a specific time period (such as a year or quarter year). Where such pieces indicate that the information can be used to assist in tax preparation, for planning or budgeting purposes, or simply for the addressee's records, that language indicates that the purpose of the personal information, at least in part, is not to support an advertisement. A second example concerns the nonprofit solicitation described above. If the mailpiece stated that the information about the addressee's previous donation could serve as a receipt or be used for a tax record, that statement would indicate that there is a purpose for the information in addition to supporting the charitable solicitation.

In addition to these administrative concerns, a number of commenters requested more guidance as to what constitutes “personal information.” Some commenters suggest a list of information considered “personal.” Again, such suggestions raise administrative concerns. First, if the Postal Service were to publish such a list, it would be subject to continuous review and change as mailer practices evolve. Second, we suspect that we would be called upon to define each item and apply those definitions in the context of individual mailings. Again, we believe this application would lead to significant administrative problems.

The proposal (69 FR 20843) did provide significant guidance about personal information. It explained that personal information includes “any information specific to the addressee” and need not be unique to the addressee. This policy is the same as exists today. Additionally, we again point out that employees are trained to determine whether information is personal on the basis of the mailpiece itself. Our Customer Support Ruling concerning proxy statements (CSR PS-159) provides a good example. When a proxy card contains the number of shares without identifying the information, postal employees cannot determine what the number represents or whether it is personal to the addressee. Accordingly, it would not be considered personal information. In contrast, when the number is labeled “shares,” it is clear what the number represents, and that it is personal information to the addressee.

One of the comments by an organization representing the interests of nonprofit organizations took issue with the language in the proposed rule that requires the advertising or solicitation to be “explicit.” The commenter argued that mailers may sometimes prefer a subtle sell to one that “yells at the addressee.”

This comment appears to be based on a misperception of the proposal. The Postal Service is not seeking to direct mailers' advertisement copy. The rule does not require a sell that “yells at the addressee.” Rather, it requires that the mailpiece be clear what product or service is offered for sale or lease, no matter how hard or soft the advertiser's copy. Moreover, if the product or service offered is not identified in the mailpiece, it is unlikely that the personal information could be directly related to it.

Although we are not adopting the specific changes to the standards suggested by mailers concerned about the consistent application of our policies, we remain sensitive to the issues raised by these customers. We are taking a number of steps to alleviate these concerns and ensure the consistent application of the rules. We will undertake extensive training of postal personnel, including training emphasizing that these mail classification decisions must be based upon the content of the mailpiece, rather than the employee's perception or personal belief concerning the purposes of the mailer or the mailpiece. Second, consistent with the recommendations of a number of commenters, we are reviewing our CSRs on these issues. CSRs are “case studies” publicly available on the Postal Service's Postal Explorer Web site ( http://pe.usps.gov ) and provide specific guidance concerning the application of mailing standards. Current CSRs will be updated and re-issued in harmony with the effective date of the new standards. Moreover, both in advance of and following the effective date of the new standard, the Postal Service will consider and issue new CSRs concerning “cases” that have arisen, or that are expected to arise, under the new standards.

Finally, the Postal Service is willing to provide mailers with advance rulings, during the planning or pre-production stages of their mailings, so that customers will have certainty regarding the prices they will be asked to pay at the acceptance dock. This guidance is generally already available to mailers on an informal, local basis, and some mailers routinely take advantage of this opportunity. The Postal Service plans to expand the availability of these types of rulings.

Several of the remaining commenters, noting privacy and security issues, urged that certain types of mailings not be permitted to be entered as Standard Mail to protect highly personal information. One such commenter suggested that the Postal Service roll back the use of personal information in Standard Mail to the “permissible written additions” ( e.g. , name of the addressee and marks, numbers, names, or letters describing the contents) customarily allowed in Standard Mail prior to the precedent rulemaking of the 1980s upon which this clarification is based.

For the reasons discussed above, the Postal Service will not classify mail based on the specific nature of the personal information provided in the mailpiece or provide a list of personal information required to be sent as First-Class Mail. We note, nonetheless, that one effect of this rulemaking will be that more mail will be classified properly. That is, mail required by standard to be entered as First-Class Mail due to the inclusion of personal information will be identified and entered as First-Class Mail. Personal information can be included in Standard Mail only in limited circumstances, when the exclusive reason for inclusion of all of the personal information is to support the advertising or solicitation in the mailpiece. Thus, it is possible that an additional consequence of this rulemaking will be to reduce the amount of personal information in Standard Mail.

A small number of commenters were concerned that the proposed rule raises First Amendment issues. For one, on behalf of nonprofit organizations, it is argued that “[C]haritable appeals for funds * * * involve a variety of speech interests—communication of information, the dissemination and propagation of views and ideas, and the advocacy of causes—that are within the protection of the First Amendment.” This argument appears to acknowledge that the proposed standards are based on content of the mail and the assertion that the test may not be administered consistently.

It is true that the proposed eligibility standards for First-Class Mail and Standard Mail, like those that exist today for all mail classes, are based on the content of the mailpiece. These standards are based on the DMCS (as well as current and former statutes), and the Postal Service is required to follow them in the Domestic Mail Manual. The Postal Service is not denying service based on content, but instead is classifying the mail.

We also disagree, for the reasons explained above, that administration of the proposed rule, with the modifications adopted herein, will be difficult or will lead to inconsistency. On the contrary, we believe these changes will ease efforts to classify First-Class Mail and Standard Mail for both postal customers and postal employees.

For these reasons, the Postal Service adopts the proposed rule with the changes stated above.

I. Background

On July 2, 2003, the Pennsylvania DEP submitted formal SIP revisions to establish RACT for two sources of VOC and NO X located in Pennsylvania. On May 24, 2004 (69 FR 29444), EPA published a direct final rule (DFR) approving revisions to DEP-issued operating permits which establish and require RACT for the National Fuel Gas Supply Corporation's Roystone Compressor Station located in Sheffield, Warren County, Pennsylvania (OP 62-141F) and the Crompton Corporation's facility located in Fairview Township, Butler County, Pennsylvania (OP 10-037). A description of the RACT determinations and EPA's rationale for approving them were provided in the May 24, 2004 DFR and will not be restated herein. In accordance with direct final rulemaking procedures, on May 24, 2004 (69 FR 29480), EPA also published a companion notice of proposed rulemaking on these SIP revisions inviting interested parties to comment on the DFR. On May 26, 2004, EPA received adverse comment on its approval of the RACT determination for National Fuel Gas and Supply Corporation's Roystone Compressor Station (National). EPA received no adverse comments on its approval of the RACT determination for the Crompton Corporation's facility, and, therefore, EPA's May 24, 2004 DFR approving DEP's RACT determination for the Crompton facility became effective on July 23, 2004. On July 2, 2004 (69 FR 40324), due to receipt of the adverse comment on its approval of the DEP's RACT determination for National, EPA published a partial withdrawal of the DFR, specifically withdrawing its final rule approving DEP's RACT determination for National. A summary of the adverse comment and EPA's responses to the comment are provided in Section II of this document.

Comment: On May 26, 2004, a citizen submitted adverse comment on EPA's approval of the DEP's RACT determination for National. The commenter states that the allowable NO X limitation imposed by the DEP on National's Units 1, 2 and 3 should be decreased from 5.3 lbs per hour to 1.3 lbs per hour and that all the other NO X rates set in the DEP's permit should be cut in half. The commenter contends that rather than simply re-stating state law which is too low, Federal officials should impose higher standards.

Response: EPA disagrees with the commenter. The EPA has no authority to modify the submitted RACT rules as requested by the commenter. The CAA requires that a state determine and impose RACT for existing major sources of NO X and VOCs located in ozone nonattainment areas and the Ozone Transport Region. Those RACT requirements are then to be submitted to EPA as revisions to the SIP. EPA can only take action on a SIP revision as it submitted by a state, and cannot, through rulemaking action on a SIP revision, alter the state's submission to make its requirements more (or less) stringent. Therefore, even if EPA agreed that the commenter submitted convincing evidence that the state-submitted limits are not RACT for this facility (which, as explained below, we do not), EPA could not modify the limits as requested by the commenter, but instead could only disapprove the SIP revision submitted by the State.

With regard to the criteria EPA uses to determine whether to approve or disapprove RACT SIP revisions submitted by the Pennsylvania DEP pursuant to 25 Pa Code Chapter 129.91-129.95, we look to the provisions of those SIP-approved generic RACT regulations ( see May 3, 2001 Federal Register , 66 FR 22123) and to the requirements of the Clean Air Act and relevant EPA guidance. In approving Pennsylvania's generic RACT regulations, 25 Pa Code Chapters 121 and 129, EPA, thereby, approved the definitions, provisions and procedures contained within those regulations under which the Commonwealth would require and impose RACT. Subsection 129.91, Control of major sources of NO X and VOCs, requires subject facilities to submit a RACT plan proposal to the DEP in accordance with subsection 129.92, entitled, RACT proposal requirements. Under subsection 129.91, the DEP will approve, deny or modify each RACT proposal, impose the resulting RACT determination in an operating permit or plan approval, and submit each RACT determination to EPA for approval as a SIP revision. EPA reviews the case-by-case RACT plan approvals and/or permits submitted as individual SIP revisions by the Commonwealth to verify and determine if they are consistent with the RACT requirements of the Act and any relevant EPA guidance. EPA first reviews a SIP submission to ensure that the source and the Commonwealth followed the SIP-approved generic rule when applying for and imposing RACT, respectively. Then EPA reviews the technical and economic analyses conducted by the source and the state. If EPA believes additional information may further support or would undercut the RACT analyses submitted by the state, then we may add additional EPA-generated analyses to the record of our rule to approve or disapprove the SIP revision. EPA's review of the Commonwealth of Pennsylvania's submission of its RACT determination for National imposed in DEP operating permit (OP 62-141F) indicates that the requirements of its SIP-approved generic RACT regulation 25 Pa Code Chapter 129.91-129.95 have been met. See preamble of the Direct Final Rule, May 24, 2004, (69 FR 29444). The commenter did not submit any supporting technical information to support that the suggested alternative emission limitations for National's Roystone Compressor Station are RACT. Additionally, the commenter did not submit any justification or analysis to suggest that the RACT limits submitted by the State are inconsistent with the State's RACT regulations, the CAA or EPA guidance. Because the commenter has submitted no new information that would cause us to reconsider our analysis that accompanied the proposed rule, we continue to believe that analysis supports our approval of the RACT limit for National.

EPA is approving the Pennsylvania DEP's RACT requirements for the National Fuel Gas Supply Corporation's Roystone Compressor Station, located in Sheffield, Warren County, Pennsylvania. EPA is approving this RACT SIP submittal because DEP established and imposed these RACT requirements in accordance with the criteria set forth in the SIP-approved RACT regulations applicable to these sources. The DEP has also imposed record keeping, monitoring, and testing requirements on National Fuel Gas Supply Corporation's Roystone Compressor Station sufficient to determine compliance with the applicable RACT determinations.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 804 exempts from section 801 the following types of rules: (1) Rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding today's action under section 801 because this is a rule of particular applicability establishing source-specific requirements for one named source.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action pertaining to RACT for National Fuel Gas Supply Corporation's Roystone Compressor Station, located in Sheffield, Warren County, Pennsylvania, may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

I. Background

Pursuant to sections 182(b)(2) and 182(f) of the CAA, the Commonwealth of Pennsylvania (the Commonwealth or Pennsylvania) is required to establish and implement RACT for all major VOC and NO X sources. The major source size is determined by its location, the classification of that area, and whether it is located in the ozone transport region (OTR). Under section 184 of the CAA, RACT, as specified in sections 182(b)(2) and 182(f) applies throughout the OTR. The entire Commonwealth is located within the OTR. Therefore, RACT is applicable statewide in Pennsylvania.

On August 15, 2003, PADEP submitted formal revisions to its SIP to establish and impose case-by-case RACT for several major sources of VOC and NO X . This rulemaking pertains to two of those sources, namely, Tennessee Gas Pipeline Company (TGP), Station 321, located in Susquehanna County, Pennsylvania and Tennessee Gas Pipeline Company (TGP), Station 219, located in Mercer County, Pennsylvania. The RACT determinations and requirements are included in operating permits (OP) issued by PADEP. The RACT requirements imposed by PADEP and submitted to EPA for approval as SIP revisions are described in the following paragraphs.

The TGP Company (Station 321) is in the business of transporting natural gas and operates an interstate pipeline system. In this instance, RACT has been established and imposed by PADEP in an operating permit. On August 15, 2003, PADEP submitted operating permit No. OP-58-0001A to EPA as a SIP revision. This operating permit incorporates RACT determinations for three (3) Solar Centaur Recuperated natural gas-fired turbines, one (1) Waukesha backup generator, one (1) boiler, two (2) furnaces, and thirteen (13) heaters. The RACT provisions of Section 129.91 through 129.95 limit NO X emissions from each of the Solar Centaur Recuperater turbines. These units shall not exceed 140 ppmdv corrected at 15% oxygen. The NO X emission limits apply at all times except during periods of start-up and shut-down, however the duration of start-up or shut-down shall not exceed one hour per occurrence. RACT requirements under 25 PA Code Section 129.93 (c)(1) for two furnaces, one boiler, and thirteen heaters shall be installation, maintenance, and operation in accordance with manufacturer's specifications. These sources shall also be operated and maintained in accordance with good air pollution control practices.

Under the presumptive RACT requirements 25 Pa. Code Section 129.93(c)(5), the 228 brake horsepower backup generator shall not operate more than 500 hours in any consecutive 12 month period. This source shall also be operated and maintained in accordance with good air pollution control practices. TGP shall perform semi-annual NO X tests on the three Solar Centaur turbines using an PADEP approved portable exhaust gas analyzer. The results from these tests shall be used to demonstrate compliance with NO X emissions limits. The frequency of portable analyzer tests maybe altered by PADEP based on the test results and reserve the rights to require stack tests in accordance with EPA reference methods should the data from the portable analyzer warrant.

TGP shall maintain records in accordance with the recordkeeping requirements of 25 PA Code Section 129.95 which shall include: (a) The number of hours per calendar year and (b) the amount of fuel used per calendar year in each of the sources identified in the operating permit. These records shall be retained for a minimum of 2 years and shall be made available to PADEP upon request.

The TGP Company (Station 219) operates a natural gas transmission pipeline which transports and distributes gas throughout the area. In this instance, RACT has been established and imposed by PADEP in an operating permit. On August 15, 2003, PADEP submitted operating permit No. OP-43-0272 to EPA as a SIP revision. This operating permit incorporates RACT determinations for fourteen (14) Cooper-Bessemer engines, four (4) heaters, one (1) boiler, one (1) office and utility furnace and three (3) auxiliary engines. NO X emissions from each of the following Cooper-Bessemer engines shall not exceed the following: Six GMV-IOTF 31.6 lb/hr., Two GMV-IOTFS 11.9 lb/hr., Five GMVA-10 33.3 lb/hr., One 16V-250 48.5 lb/hr. The 6 Cooper-Bessemer GMV-IOTF engines shall be set and maintained with an ignition timing of 6 degrees before top dead center, which corresponds to a 3 degree retard from a standard ignition timing of 9 degrees before top dead center. The 5 Cooper-Bessemer GMV10 engines shall be set and maintained with an ignition timing of 8 degrees before top dead center, which corresponds to a 4 degree retard from a standard ignition timing of 12 degrees before top dead center. These engines shall also be operated and maintained in accordance with good air pollution control practices. RACT requirements under 25 PA Code Section 129.93 (c)(1), 1 boiler, 4 furnaces and heaters shall be installation, maintenance, and operation in accordance with manufacturer's specifications. These sources shall also be operated and maintained in accordance with good air pollution control practices. RACT requirements under 25 PA Code Section 129.93 (c) (3), for 3 auxiliary engines shall be set and maintained at 4 degree retarded before top dead center relative to standard ignition timing. These engines shall be maintained and operated in accordance with manufacturer's specifications and with good air pollution control practices. Rules and Regulations under PADEP RACT provisions of Section 129.91 through 129.95, volatile organic compounds (VOC) emissions from one 16-V250 Cooper-Bessemer engine shall not exceed 6 lbs per hour and 26.3 tons per year calculated on a 12-month rolling basis. The VOC RACT for all sources shall be operated and maintained in accordance with good air pollution control practices. TGP (Station 219) shall perform semi-annual NO X tests on all 14 Cooper-Bessemer engines using PADEP approved portable exhaust gas analyzer. The results from these tests shall be used to demonstrate compliance with NO X emissions limits.

EPA is approving the operating permits issued to the two Tennessee Gas Pipeline Companys' by PADEP as described in Section II. EPA is approving them as SIP revisions because the Commonwealth established and imposed requirements in accordance with the criteria set forth in SIP-approved regulations for imposing RACT or for limiting a source's potential to emit. The Commonwealth has also imposed record-keeping, monitoring, and testing requirements on these sources sufficient to determine compliance with these requirements.

EPA is approving revisions to the Commonwealth of Pennsylvania's SIP which establish and require RACT for these two major sources of VOC and NO X : (1) Tennessee Gas Pipeline Company, Station 321, located in Susquehanna County, Pennsylvania (OP-58-0001A); (2) Tennessee Gas Pipeline Company, Station 219, located in Mercer County, Pennsylvania (OP-43-0272). EPA is publishing this rule without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comment. However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This direct final rule will be effective on December 27, 2004 without further notice unless we receive adverse comment by November 26, 2004. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 804 exempts from section 801 the following types of rules: (1) Rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding today's action under section 801 because this is a rule of particular applicability establishing source-specific requirements for two named sources.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action.

This action approving the Commonwealth's source-specific RACT requirements to control NO X and VOC from two individual sources may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Throughout this document, “we,” “us” and “our” refer to EPA.

On October 30, 2003 (68 FR 61782), EPA proposed to approve the following rules into the California SIP.

We proposed to approve these rules because we determined that they complied with the relevant CAA requirements. Our proposed action contains more information on the rules and our evaluation.

EPA's proposed action provided a 30-day public comment period. During this period, we received comments from the following parties.

1. Adrienne Bloch, Communities for a Better Environment (CBE); letter and electronic mail dated November 21, 2003.

2. Marc Chytilo, Transportation Solutions Defense and Education Fund (TRANSDEF); co-signee same letter referenced above. The comments and our responses are summarized below.

Comment: EPA should disapprove or defer action on BAAQMD Rules 8-14 and 8-19 because on July 23, 2003 a State Court ruled that the BAAQMD did not follow mandated state law in adopting the 2001 SIP stationary source control measure SS-13 (Rules 8-14 and 8-19 in a different form). The State Court found that the BAAQMD's initial study and negative declarations under the California Environmental Quality Act (CEQA) for the 2001 Ozone Attainment Plan (OAP), including SS-13, were inadequate. Given that the BAAQMD has not met CEQA's substantive and procedural requirements, the commenters assert that the BAAQMD has neither legal authority to adopt Rules 8-14 and 8-19, nor sufficient procedural evidence that they have followed State law in adopting and submitting Rules 8-14 and 8-19. Consequently, EPA should reject the rule revisions concerning Rules 8-14 and 8-19 because they violate the Clean Air Act (CAA) at Section 110(a)(2)(E) and EPA regulations at 40 Code of Federal Regulations (CFR), Part 51, Appendix V.

The CAA Section 110(a)(2)(E) does not allow EPA to approve a SIP revision unless the State can assure that it has authority under state and local law to carry out the SIP revision. CFR 40 Part 51, Appendix V requires that a State provide evidence of legal authority to adopt a SIP revision and show that the State followed all of its procedural requirements.

EPA Response: In subsequent actions, BAAQMD and the commenters, CBE and TRANSDEF, appealed the July 23, 2003 State Court decision. In April 2004, BAAQMD, CBE, and TRANSDEF entered into a settlement agreement that vacated the July 23, 2003 State Court judgement. As a part of the settlement, CBE and TRANSDEF agreed to dismiss their lawsuit against BAAQMD that challenged the 2001 OAP on CEQA and other grounds and relinquish all claims associated with the lawsuit. Consequently, we are left with no substantive basis requiring that we adjudicate CBE and TRANSDEF's claim that we should not act on Rules 8-14 and 8-19 as submitted.

However, it should be noted that as part of BAAQMD's September 2002 adoption action on Rules 8-14 and 8-19, the district published its “Initial Study/Negative Declaration for Amendments to the BAAQMD Regulation 8, Rules 4, 14, 19, 31, and 43 (Surface Coating Rules.)” This document provided the basis for the BAAQMD Board's negative declaration within the district's resolution of adoption and for satisfying its CEQA obligations. In turn, this negative declaration and other submittal documents provided the basis for EPA's May 13, 2003 completeness finding on Rules 8-14 and 8-19.

No comments were submitted that change our assessment that the submitted rules comply with the relevant CAA requirements. Therefore, as authorized in section 110(k)(3) of the Act, EPA is fully approving these rules into the California SIP.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. section 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. section 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

On July 12, 2004, the State of Maryland submitted a formal revision to its State Implementation Plan (SIP). The SIP revision consists of amendments to COMAR 26.11.19.17—Control of VOC Emissions from Yeast Manufacturing. Yeast is manufactured in large reaction vessels referred to as fermenters. In Maryland, most of the yeast manufactured is baker's or nutritional yeast. The yeast is manufactured in batches with an average fermenting time of 18 hours for each batch.

The amendments to COMAR 26.11.19.17 add the following definitions: (a) “nutritional yeast” means a yeast that becomes an ingredient in dough for bread or any other yeast-raised baked product; or a nutritional food additive intended for consumption by humans; and (b) “specialty yeast” means a yeast that is used in the production of beer, wine or alcoholic beverages or in the production of ethanol. The amendment also limits the production of specialty yeast to less than one percent by weight of the total annual yeast production excluding specialty yeast batches that meet the emission limits for nutritional yeast. Compliance with this amendment shall be achieved beginning July 1, 2004 and determined with the use of continuous emission monitors. In addition, the amendment removed the requirement to conduct periodic stack tests because the VOC emissions are now determined by continuous monitors.

The standards in the amended regulation shall be met for at least 98 percent of all nutritional yeast batches in each 12-month period. The amended regulation also requires semi-annual reports submitted to MDE by the end of the month following each 6-month period. The semi-annual reports shall include: (a) A summary of the number of batches for each month and calculations showing the percent of batches that failed to meet the VOC standards for each month; (b) calculations showing the percent of batches that failed to meet the VOC standards during the 6-month period; and (c) calculations showing the percent of batches, by fermenter, that were not monitored during the 6-month period.

EPA is approving the amendments to COMAR 26.11.19.17, “Control of VOC Emissions from Yeast Manufacturing,” submitted by MDE on July 12, 2004. Implementation of these amendments will result in the reduction of VOC emissions from yeast manufacturing facilities.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on December 27, 2004 without further notice unless EPA receives adverse comment by November 26, 2004. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action.

This action, pertaining to the amendments to control VOC emissions from yeast manufacturing facilities in Maryland, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Under the CAA, EPA may redesignate areas to attainment if sufficient data are available to warrant such changes and the area meets the criteria contained in section 107(d)(3) of the CAA. These criteria include full approval of a maintenance plan for the area. The requirements for a maintenance plan are found in section 175A of the CAA. The Weirton area, located in Hancock County and Brooke County (part), was classified as an area likely to be in violation of the PM 10 NAAQS on August 7, 1987 (52 FR 29383). On August 14, 1989, the Oak Street monitoring site in the Weirton area recorded the fourth exceedance of the 24-hour PM 10 NAAQS in a three-year period. The Weirton area was designated by EPA as a moderate PM 10 nonattainment area on December 21, 1993 (58 FR 67334). The Weirton area has monitored attainment of the NAAQS for PM 10 since 1998.

On May 24, 2004, the WVDEP submitted a redesignation request and maintenance plan for the Weirton moderate PM 10 nonattainment area. West Virginia's May 24, 2004 submittal provides for the attainment and maintenance of the NAAQS for PM 10 in the Weirton area and satisfies the requirements of section 107(d)(3)(E) of the CAA, necessary for redesignation. When approved, the maintenance plan and its contingency measures submitted by the WVDEP for the Weirton area will become part of the West Virginia SIP.

The WVDEP's submittal includes an analysis of quality-assured, ambient air quality monitoring data documenting attainment of the NAAQS for PM 10 in the Weirton area and additional documentation to satisfy EPA's policy entitled “Reasonable Further Progress, Attainment demonstration, and Related Requirements for Ozone Nonattainment Areas Meeting the Ozone National Ambient Air Quality Standard” signed by John S. Seitz and dated May 10, 1995, commonly referred to as the Clean Data Policy (CDP). EPA is making a clean data determination under its May 10, 1995 CDP for the Weirton area thereby waiving certain part D requirements related to the attainment demonstration, reasonable further progress and their associated contingency measures for the Weirton area. Details of how West Virginia has satisfied the May 10, 1995 CDP are found in III.B.2. of this document.

The CAA provides the requirements for redesignating a nonattainment area to attainment. Specifically, section 107(d)(3)(E) allows for redesignation providing that: (1) The Administrator determines that the area has attained the NAAQS; (2) The Administrator has fully approved the applicable implementation plan for the area under Section 110; (3) The Administrator determines that the improvement in air quality is due to permanent and enforceable reductions in emissions resulting from implementation of the applicable Federal air pollutant control regulations and other permanent and enforceable reductions; (4) The Administrator has fully approved a maintenance plan for the area as meeting the requirements of section 175(A); and, (5) The State containing such area has met all requirements applicable to the area under section 110 and part D. The EPA has reviewed the redesignation request submitted by the WVDEP on May 24, 2004 for the Weirton area and finds that its meets the five requirements for redesignation found in section 107(d)(3)(E) of the CAA.

EPA's review of the monitoring data submitted by West Virginia indicates that the Weirton area has attained, and continues to attain, both the 24-hour and annual PM 10 standard. The PM 10 monitoring network in the Weirton area consists of four monitors within the nonattainment area. The three years of data used in the redesignation request are the years 2000-2002, inclusive. The maximum annual average for the 3-year period is 32 μ/m 3 . The maximum 24-hour value is 112 μ/m 3 . Although the May 24, 2004 formal redesignation request uses 2000-2002 monitoring data, the Weirton area has, in fact, monitored attainment from the years 1998 through 2003, and continues to monitor attainment of the NAAQS for PM 10 .

General SIP elements are delineated in section 110(a)(2) of Title I, part A. These requirements include but are not limited to the following: submittal of a SIP that has been adopted by the state after reasonable notice and public hearing, provisions for establishment and operation of appropriate apparatus, methods, systems and procedures necessary to monitor ambient air quality, implementation of a permit program, provisions for part C, Prevention of Significant Deterioration (PSD), and part D, New Source Review (NSR) permit programs, criteria for stationary source emission control measures, monitoring and reporting, and provisions for public and local agency participation. The May 24, 2004 SIP submittal provided documentation of that the West Virginia SIP satisfies all of the section 110 and part D requirements of the CAA which apply to the Weirton area. EPA has concluded that the West Virginia SIP for the Weirton area satisfies all of the section 110 SIP requirements of the CAA.

Before the Weirton area may be redesignated to attainment, it must have fulfilled the applicable requirements of part D of the CAA. As stated previously, EPA had determined that certain part D requirements are no longer required to be met by the Weirton area under EPA's May 10, 1995 CDP. The clean data area approach applies the policy already in place for ozone nonattainment areas to selected PM 10 nonattainment areas. The CDP policy reduces the requirements for submittal of certain requirements in nonattainment areas which are demonstrating attainment with the NAAQS. For areas meeting the five criteria discussed in the CDP, states are not required to submit SIP revisions concerning reasonable further progress, attainment demonstration or their associated contingency measures. West Virginia has met the criteria of the CDP for the Weirton area as follows:

(a) The area must be attaining the PM 10 NAAQS with the three most recent years of quality assured air quality data. West Virginia has provided evidence of the Weirton area attaining the NAAQS for PM 10 . There are four PM 10 monitors within the Weirton area. There have been no exceedances of the 24-hour standard of 50 μg/m 3 during the past five years. The monitors have never recorded a violation of the annual PM 10 standard of 150 μg/m 3 . The Weirton area 24-hour value for calendar years 2000-2002, as found in EPA's Air Quality Subsystem (AQS), is 32 μg/m 3 . The annual value for the Weirton area during the same time period is 112 μg/m 3 .

(b) The State must continue to operate an appropriate PM 10 air quality monitoring network, in accordance with 40 CFR part 58, in order to verify the attainment status of the area. In the maintenance plan submitted on May 24, 2004, which EPA is approving as part of this rulemaking, the State of West Virginia has committed to continue to monitor the Weirton area.

(c) The control measures for the area, which were responsible for bringing the area into attainment, must be approved by EPA. In its May 24, 2004 submittal, the WVDEP provides details on the emission reductions responsible for bringing the area into attainment. The primary control measures to achieve attainment include making permanent and enforceable the shutdown of specified steel manufacturing and processing facilities which occurred after the Weirton area was designated and classified nonattainment. The request for redesignation specifically cites to a Federally-enforceable consent order between State of West Virginia and the Weirton Steel Corporation. This consent order was approved as a revision to the West Virginia SIP on May 5, 2004 ( 69 FR 24986). The requirements of the consent order resulted in a permanent and enforceable reduction of 1345 tons per year of PM 10 .

(d) An emissions inventory must be completed for the area. An emission inventory for the Weirton area was completed and submitted as part of the maintenance plan which EPA is approving as part of this rulemaking.

(e) EPA must make a finding that the area attained the 24-hour and annual PM 10 NAAQS.

EPA published a notice in the Federal Register on May 16, 2001 announcing that the Weirton area had attained the NAAQS for PM 10 (66 FR 27034). Pursuant to the May 10, 1995 CDP, EPA, in this rulemaking, is again determining that the Weirton area has attained the NAAQS for PM 10 . This determination is based on three years of complete, quality-assured, ambient air quality monitoring data for the years 2000-2002. EPA has determined that West Virginia has met the requirements of the CDP. Therefore, the requirements under CAA section 172(c) for developing an attainment demonstrations, RFP demonstration and their associated contingency measures are waived due to the fact that the Weirton area, by satisfying the criteria of the CDP, has been determined by EPA to have already attained the NAAQS for PM 10 and met RFP.

However, any requirements that are connected solely to designation or classification, such as new source review (NSR) and RACM/RACT, will remain in effect. Therefore, the consent order approved as a revision to the West Virginia SIP on May 5, 2004 ( 69 FR 24986) will remain in effect after the Weirton area is redesignated. The Federal requirements for new source review (NSR) in nonattainment areas are contained in section 172(c)(5). The CAA and EPA guidance provide that the requirements of the part D nonattainment area NSR program will be replaced by the state's prevention of significant deterioration (PSD) program when an area has reached attainment and been redesignated, provided there are assurances that PSD will become fully effective immediately upon redesignation. West Virginia's regulations for its PSD permitting program were approved into the West Virginia SIP on April 11, 1986 (51 FR 12518). Under the West Virginia SIP, the state's PSD permitting program will become fully effective in the Weirton area immediately upon its redesignation to attainment.

The emission reductions responsible for bringing the Weirton area into attainment have been made permanent and enforceable by the consent order between the State of West Virginia and the Weirton Steel Corporation (CO-SIP-C-2003-28). As discussed above, this consent order was approved as a revision to the West Virginia SIP on May 5, 2004 (69 FR 24986). These emission reductions are permanent and enforceable. Should any of the shutdown operations or facilities made permanent and enforceable by the consent order seek to be become operational, they would be subject to the West Virginia's SIP NSR requirements, including PSD once the Weirton area is redesignated.

Section 175A of the CAA sets forth the necessary elements of a maintenance plan needed for areas seeking redesignation from nonattainment to attainment. The plan must demonstrate continued attainment of the applicable NAAQS for at least 10 years after the EPA approves a redesignation to attainment. If applicable, eight yeas after the redesignation, West Virginia must submit a revised maintenance plan which demonstrates attainment for the 10 years following the initial 10-year period. To address potential future NAAQS violations, the maintenance plan must contain contingency measure with a schedule for implementation adequate to assure prompt correction of any air quality problems. The State of West Virginia submitted a PM 10 Maintenance Plan for the Weirton, West Virginia Area on May 24, 2004. The maintenance plan and associated contingency measures are being approved into the SIP as part of this rulemaking.

Details of the Weirton area maintenance plan and how it satisfies the requirements of 175A are provided in the following paragraphs.

1. Emissions Inventory —West Virginia has submitted an Emission Inventory of sources in the Weirton area for calendar year 2001. The year 2001 is representative of the emissions in the Weirton area during the years 2000-2002, the three years for which quality assured ambient air quality data documenting attainment were submitted for Weirton area. By approving the maintenance plan, EPA is approving the emission inventory.

2. Maintenance demonstration —The maintenance plan includes an emission inventory of emission levels reflective of attainment in the Weirton area and limits emissions to those levels which ensure maintenance of the NAAQS for PM 10 in the Weirton area. The PSD review and permitting requirements for any future major source construction of modification and the permanent and enforceable control measures on existing sources are provided in the maintenance plan. Subsequent to redesignation, any major source construction or modification will be subject to the PSD requirements found in West Virginia's SIP, including a demonstration to ensure protection and maintenance of the NAAQS and applicable PSD increments. By approving the maintenance plan, EPA is approving the maintenance demonstration.

3. Continuation of the monitoring network —West Virginia has indicated in the May 24, 2004 maintenance plan that it will continue to monitor for PM 10 in the Weirton area in accordance with 40 CFR 53 and 58. By approving the maintenance plan, EPA is approving West Virginia's plan to continue to monitor for PM 10 in the Weirton area.

4. Verification of Continued Attainment —The maintenance plan states that the WVDEP will review the monitoring data annually to verify continued attainment. WVDEP will also assess compliance of local facilities. If still required by the CAA, the Weirton area maintenance plan will be reassessed not later than eight years after the area is redesignated to attainment.

5. Contingency Plan —The WVDEP has indicated in the maintenance plan that it will rely on ambient air monitored data to determine the need to implement contingency measures. In the event of an exceedance of the PM 10 standard, the WVDEP will review the monitored data, the local meteorology data, and the compliance of local facilities. If all facilities are in compliance with applicable SIP and permit emissions limits, the WVDEP will determine and impose additional control measures necessary to continue to maintain the NAAQS. Upon determination that three exceedances of the 24-hour PM 10 standard have occurred within a three-year period the WVDEP will notify companies with emission sources of PM 10 in the Weirton area that there may be a need to reduce PM 10 emissions to address a potential violation of the NAAQS. Within six months of this notification, the companies must submit a detailed plan of action specifying additional control measures to reduce PM 10 emissions, to be implemented no later than 18 months after the notification of a violation of the NAAQS. The additional control measures necessary to ensure attainment will be imposed by WVDEP and submitted to EPA for approval and incorporation into the SIP.

In summary, EPA has determined that West Virginia's May 24, 2004 submittal satisfies the requirements of section 107(d)(3)(E) of the CAA, and is redesignating the Weirton area to attainment for PM 10 . EPA is also approving the WVDEP's maintenance plan and its associated contingency measures for the Weirton area as a revision to the West Virginia SIP.

EPA is determining that the Weirton area has attained the NAAQS for PM 10 and has met the requirements of the May 10, 1995 CDP. On the basis of this determination, EPA is also determining that certain attainment demonstration requirements, along with other related requirements of the CAA, are not applicable to the Weirton area. EPA is approving the State of West Virginia's May 24, 2004 request to redesignate the Weirton area to attainment for PM 10 and is approving the associated maintenance plan as a revision to the West Virginia SIP.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment as there was opportunity for stakeholder input in the SIP development process. However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on December 27, 2004 without further notice unless EPA receives adverse comment by November 26, 2004. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2004. Filing a petition for reconsideration by the Administrator of this final rule to redesignate the Weirton area to attainment for PM 10 and approve the maintenance plan for the area does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action to approve West Virginia's redesignation request and maintenance plan for the Weirton PM 10 area may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

I. General Information A. Does This Action Apply to Me?

This action is directed to the public in general. However, this action is of particular interest to TLC, the major objector to the use of LGA as a pesticide product and to Lucinda Larson, the only objector who specifically added GABA to her objection as well as LGA. Several other objectors expressed an objection to the Federal Register notice exempting the two chemicals from the requirement of a tolerance, without specifying either one. This action is also of interest to Emerald BioAgriculture Corporation, the manufacturer of AuxiGro TM , the only pesticide product that uses LGA and GABA as active ingredients, as well as users of AuxiGro TM products. Since various different entities may be interested in this action, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

In addition to using EDOCKET ( http://www.epa.gov/edocket/ ), you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ . A frequently updated electronic version of 40 CFR part 180 is available at E-CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/ .

From June 28, 2001 through January 14, 2002, TLC and others filed a series of objections to EPA's issuance of an exemption from the requirement of a tolerance under section 408 of the FFDCA for use of LGA and GABA on all food commodities when applied/used in accordance with good agricultural practices. EPA is denying the objections because it has reviewed all available data on these pesticides and maintains its conclusion that the uses of these pesticides are safe. None of the objectors filed a hearing request.

Section 408 of the FFDCA authorizes the establishment by regulation of maximum permissible levels of pesticides in foods. Such regulations are commonly referred to as ``tolerances.'' Without such a tolerance or an exemption from the requirement of a tolerance, a food containing a pesticide residue is ``adulterated'' under section 402 of the FFDCA and may not be legally moved in interstate commerce. 21 U.S.C. 331, 342. Monitoring and enforcement of pesticide tolerances are carried out by the U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA).

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance only if EPA determines that the tolerance is ``safe.'' Section 408(b)(2)(A)(ii) defines ``safe'' to mean that ``there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.'' This includes dietary exposure through food and drinking water and exposure other than dietary that occurs in non-occupational settings. In making safety determinations, EPA is required to consider, among other things, ``available information concerning the cumulative effects of the pesticide chemical residue and other substances that have a common mechanism of toxicity.'' 21 U.S.C. 346a(b)(2)(D)(v). Section 408(b)(2)(C) requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to ``ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .'' 21 U.S.C. 346a(b)(2)(C). For pesticides that pose a threshold effect, EPA is directed to apply ``an additional tenfold margin of safety . . . to take into account potential pre- and post-natal toxicity and completeness of the data with respect to exposure and toxicity to infants and children.'' [hereinafter referred to as ``the children's safety factor''] Id. This provision additionally specifies that EPA ``may use a different margin of safety for the pesticide chemical residue only if, on the basis of reliable data, such margin will be safe for infants and children.'' Id. The procedure for establishing tolerance regulations is generally initiated by pesticide manufacturers through the filing with EPA of a petition requesting the establishment of a tolerance. See 21 U.S.C. 346a(d). EPA is required to publish notice of this petition as well as a summary of the petition prepared by the petitioner. Id. 346a(d)(3). After evaluation of the petition, EPA may issue a final tolerance regulation, a proposed tolerance regulation, or an order denying the petition. Id. 346a(d)(4). Once a final tolerance regulation is issued, any person may, within 60 days, file written objections to any aspect of this regulation and may also request a hearing on issues of fact raised by the objections. Id. 346a(g).

EPA regulations specify that if a hearing is requested, the objections must include a statement of the factual issues on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the requestor. 40 CFR 178.27. A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established, resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues in the manner sought by the requestor would be adequate to justify the action requested. 40 CFR 178.32. EPA's regulations specify that if no hearing is requested, or a requested hearing is denied, EPA will publish in the Federal Register its determination on each objection submitted. 40 CFR 178.37(a).

LGA and GABA are pesticides produced by Emerald BioAgriculture (formerly Auxein) Corporation. They are currently registered under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136 et seq., for use on all food commodities (40 CFR 180.1187 and 180.1188) and exemptions for the requirement of tolerances covering all uses have been established under the FFDCA.

In 1987, EPA approved use of LGA as a plant nutrient inert for seed treatment [40 CFR 180.1001(d)].

In August 1997, EPA published a notice of the first application for a new pesticide product containing both of these active ingredients (62 FR 42782, August 8, 1997) (FRL-5735-1). This notice announced receipt of an application to register a pesticide product, AuxiGro WP (EPA File Symbol 70810-R) containing new active ingredients GABA: gamma aminobutyric acid at 29.2% and glutamic acid at 36.5%, not included in any previously registered product pursuant to the provisions of section 3(c)(4) of the FIFRA, as amended. This product was a plant growth enhancer for use to increase yields and the quality of crop plants and early ripening in certain vegetables. EPA received no comments or objections to this application.

In September 1997, in response to a petition submitted by Auxein Corporation, EPA issued temporary tolerances for glutamic acid (62 FR 46882, September 5, 1997) (FRL-5741-3) and GABA (62 FR 46885, September 5, 1997) (FRL-5741-4) on crops including: snap beans, peanuts, cotton, potatoes, tomatoes, lettuce, green peppers, spinach, broccoli, cauliflower and cabbage to enhance crop yields. These tolerances were scheduled to expire on October 1, 1999. Again, EPA received no comments or objections to the exemptions from the requirement for a tolerance.

Later that same year, EPA published a proposed permanent exemption from the requirement of a tolerance to cover use of both active ingredients (62 FR 56168, October 29, 1997)(FRL-5751-3). Depending on the crop, the first application of AuxiGro was made at first bloom, first bud, at the 4 to 6 leaf stage, or other prescribed growth stage. A subsequent application, for a maximum of two applications, could be made 1 to 3 weeks later. The rate range is 0.10 - 0.75 pounds of formulated product/acre per treatment, not to exceed a maximum of 1.5 lb/A per growing season. This equated to the application of 0.55 lb/A glutamic acid and 0.4 lb/A of GABA applied at the maximum use rate. EPA received no comments or objections to this proposal. EPA finalized this rule the following year (63 FR 679, January 7, 1998)(FRL-5764-4).

On August 20, 1998, after the close of the objection period, Jack Samuels of the Truth in Labeling Campaign (TLC) wrote to EPA objecting to the approval of monosodium glutamate as a pesticide (Ref. 1). EPA responded to the letter on October 13, 1998 after Mr. Samuels' objections were reviewed (Ref. 2).

In September 1998, EPA made a technical amendment to the nomenclature language of the tolerance exemption to change “glutamic acid' to “LGA” (63 FR 51302, September 25, 1998)(FRL-6029-1).

In 2000, Auxein petitioned EPA to modify 40 CFR 180.1187 and 40 CFR 180.1188 by deleting the wording ``when used as a plant growth enhancer'' from the tolerance exemption then in place and, as a result broaden the scope of the tolerance exemption, and to correct the language of the tolerance exemption then in place by changing the term ``raw agricultural commodities'' to ``food commodities” (65 FR 76241-76244, Dec. 06, 2000). EPA received no comments on the petition.

Auxein submitted efficacy studies to support the broadened use patterns and EPA evaluated the data and determined that the new claims were supported by the data. As a result, in June 2001, EPA finalized the changes proposed by Auxein by modifying 40 CFR 180.1187 and 180.1188 accordingly (66 FR 33195, June 21, 2001)(FRL-6785-6).

On June 28, 2001, Dr. Adrienne Samuels of TLC submitted an Objection to the Exemption from the Requirement of a Tolerance and the group was joined individually by several of their members who also submitted objections.

There were 57 objectors to the revised tolerance exemption for LGA and GABA. All objections addressed the perception that an exemption for LGA was equivalent to treating crops with “monosodium glutamate” or “processed free glutamic acid” or “processed free glutamic acid (MSG)” or to “what the Agency calls LGA.” None of the objections specifically address “LGA” or provided scientific evidence or information linking dietary consumption of LGA to adverse reactions. Similarly, none of the objections specifically cited consumption of GABA as the cause of adverse reactions or provided scientific evidence or information linking connection of dietary consumption of GABA to adverse reactions.

Rather, many objections reported the individual's reactions or someone else's reactions to dietary intake of MSG, and/or to processed free glutamic acid (MSG). These included, with frequency of reaction cited, headache/migraine (12), nausea (5), abdominal cramps (5), allergy (5), shortness of breath (4), and accelerated pulse rate (3). Other symptoms mentioned once or twice included numbness, lethargy, stiffness, distorted vision, coughing, insomnia, and facial twitching. Eight objections noted individuals felt that ingestion of “small” or “tiny” amounts of MSG elicited some reaction.

As to the general objections on LGA, there is no evidence, and objectors provide no support for a claim, that dietary consumption of LGA causes adverse human health effects. This is the case regardless of whether the dietary consumption is of raw or processed food containing LGA or whether the LGA is produced environmentally by natural events or in the laboratory. In fact, because LGA is a defined chemical structure and a constituent of protein, there is significant exposure to LGA via the diet unrelated to the pesticide use and it is also synthesized endogenously (Ref. 3). Objectors provide no scientific evidence or information to distinguish natural LGA from what objectors refer to as “processed” LGA. This is because there is no difference in chemical structure, for example, between LGA found in nature or the human body and LGA produced for pesticide purposes. Where the chemical structure of two chemicals is the same in all contexts, there is no scientific basis to distinguish between the chemicals.

With respect to the symptoms cited by objectors, these symptoms are representative of the “acute, temporary, and self-limited reactions” to oral ingestion of MSG, as delineated by an Expert Panel to the Food and Drug Administration (FDA) evaluating the safety of use of MSG (Ref. 3). There has been a long history of inquiry into the safety of MSG as a flavor enhancer in foods. The Expert Panel to FDA concluded that “...[b]ased on scientifically verifiable evidence, there is a subgroup of presumably healthy individuals within the population that responds generally within one hour of exposure with manifestations of the MSG Symptom Complex to an oral bolus of [greater than or equal to] 3 grams in the absence of food.” However, the Expert Panel also concluded (emphasis theirs) that “...no evidence exists to support a role of ingested glutamate in the etiology or exacerbation of...any...long-term or chronic illness.” Moreover, there is no evidence that dietary consumption of LGA elicits, or has elicited, the “MSG Symptom Complex” of reactions. None of the objections identify foods containing LGA as the cause of the reactions cited.

1. First objection . TLC states that LGA naturally bound in protein or freed from protein via the natural human digestion process causes no adverse reactions (i.e., is safe). On the other hand, they state that foreign, unnatural substances are produced from protein containing glutamic acid stereoisomers (i.e., L-glutamic and D-glutamic acid) during natural fermentation, food preparation, and processing. Specifically mentioned are the production of D-glutamic acid and pyroglutamic acid when LGA is freed from protein via (microbial) fermentation, “high heat (but not acid) hydrolysis,” “enzymolysis/autolysis,” and “secretion.” In addition, they state carcinogenic propanols are produced from acid hydrolysis, and carcinogenic heterocyclic amines may be produced from heat but not acid. They state that LGA freed from protein via these mechanisms, and containing the above contaminants causes “adverse reactions.” They call these mixtures of chemicals “processed free glutamic acid” or “processed free glutamic acid (MSG).” No data were presented on the oral or dietary toxicity of any of the contaminants, nor on the doses required to produce toxicity, if any, to humans. Neither did they provide any evidence that the components of “processed free glutamic acid” can or do elicit reactions associated with “MSG Symptom Complex,” at any level of dietary exposure. Further, TLC states “...we have never stated these so called contaminants are the cause of adverse reactions.”(Ref. 4)

EPA response . To the extent that objectors are concerned with contaminants that might be found in a pesticide product, EPA notes that its review of data/information submitted on the manufacturing process and on the chemical analyses of the technical grade of the active ingredient revealed none of the above mentioned contaminants. Thus, there is no scientific basis to support objectors' statements regarding the presence of the above mentioned contaminants and, to the extent that objectors' health-based statements are premised on the presence of these contaminants, there is no scientific basis to support objectors' statements. Had the contaminants been present in a pesticide product, a separate tolerance or exemption would typically be necessary to cover residues of such chemicals in or on food.

In addition, as noted above, an apparent primary basis for objections by TLC (both at the EPA and FDA) appears to be derived from their belief that the LGA which is derived from a (or any) manufacturing process is somehow (and in an unspecified manner) different than if it were freed from protein via a mechanism of human digestion, and is somehow different from LGA that humans and other higher organisms synthesize in their bodies, and is somehow different from the LGA that is found in unadulterated, unprocessed, unfermented food. Further, according to TLC, the LGA in lower forms of life (like bacteria) is in some unspecified manner, not equivalent to the LGA found in higher organisms. Again, as noted above, there is no scientific basis to support such an argument. The chemical structure of LGA is the same regardless of the organism in which it is found or regardless of how it is freed from protein. To claim that people may react adversely to the same chemical structure solely on the basis of how it is produced is not a sound scientific proposition.

Specifically, and as an example, when a hydrogen ion becomes disassociated from LGA, the compound is called L-glutamate. When a sodium ion becomes associated with L-glutamate the compound is called monosodium glutamate (MSG). When a potassium or ammonium ion becomes associated with L-glutamate the compounds are called respectively, monopotassium and monoammonium glutamate. When the monosodium, or monopotassium, or monoammonium salts of L-glutamate are dissolved in water the sodium, or potassium, or ammonium ions become disassociated from the glutamate molecule. Thus, “...[G]lutamate entities from glutamic acid and glutamate entities from the three [ammonium, potassium, and sodium] salts are indistinguishable and, once added to food or water and eaten, glutamate from any source, whether naturally present in food or manufactured by bacteria, is metabolized in the same manner” (Ref. 5). Likewise, upon release to the environment (as in a pesticide product, for instance) glutamate entities from LGA or from the three salts would be metabolized in the same manner by organisms in the environment.

2. Second objection . In granting the tolerance exemption, the EPA has “...violated Section 408(c)(2)(A)(i), Section 408(c)(2)(ii), Section (408)(c)(2)(b), and Section 408(b)(2)(D) of the Federal Food, Drug, and Cosmetic Act (FFDCA).”

EPA response . EPA does not agree with TLC that use of LGA or GABA as permitted by the registration and tolerance exemptions violates the specified sections of FFDCA in granting the tolerance exemption for LGA. TLC states that LGA bound in protein and freed via human digestion causes no “adverse reactions.” Since the chemical entity LGA is the same regardless of the source of protein or how it is freed from protein, it is the same as the “truly natural glutamic acid” referred to by TLC, and thus also would cause no adverse reactions. Further, none of the objectors registered any adverse reactions from dietary consumption of the chemical entity LGA as is normally found in foods. Finally, there is no evidence thus far submitted or thus far available to the Agency that dietary consumption of LGA has caused or will cause adverse effects in the U.S. population, and its subgroups. If such data/information became available, the Agency would then reassess its position with respect to the tolerance exemption for LGA (and also for GABA).

In establishing the tolerance exemption for LGA, the Agency has considered the validity, completeness, and reliability of the extensive scientific data base on LGA, including in its monosodium form (MSG), and concluded that based on that data there is reasonable certainty of no harm resulting from all anticipated dietary exposures to LGA. The Agency considered information on the dietary consumption patterns of humans, as well as the sensitivities of major identifiable subgroups of consumers, including infants and children.

In addition, the strength and weakness of the existing data base, which includes the reports and conclusions of authors cited by TLC, previously has been reviewed and summarized in detail by the 1995 Expert Panel (Ref. 3). The Agency agrees with the conclusions of the subsequently issued summary report of Dr. Donald S. Stevenson (Ref. 6) that there is no scientific basis to support any argument that LGA, or glutamate, or MSG, plays any role in allergenicity including urticaria or anaphylaxis. “It is illogical to propose that the human immune systems would form antibodies against our own amino acids....All amino acids are too small to be an antigen (allergen)” (Ref. 6). EPA also agrees with the subsequent report conclusion of Dr. David G. Hattan (Ref. 7) that based on the scientific data “...we do not concur with the Expert Panel that asthma is a predisposing medical condition associated with the ingestion of MSG.” Finally, EPA agrees with the conclusions of the subsequently issued summary report of Dr. Roland N. Auer (Ref. 8) that “[n]o causal relationship has been established between...diseases and oral MSG [or glutamate] ingestion in humans...” There also is no evidence that “...retinal diseases are caused, related to or accelerated by MSG [glutamate].”

3. Third objection . “The processed free glutamic acid (referred to in the 1998 Final Rule as LGA) that was granted an exemption from the requirement of a tolerance, is a neurotoxic endocrine disruptor that causes brain lesions [and] endocrine disorders” which are manifested as growth disorders, learning/behavior/memory deficits, MSG-associated responses, schizophrenia, multiple sclerosis (MS), Parkinson's disease, amyotrophic lateral sclerosis (ALS), etc.

EPA response . The Agency does not agree with the objection that LGA is a neurotoxic endocrine disruptor, and when consumed in the diet will lead to the stated disorders and associated diseases, and to the MSG symptom complex of reactions. As concluded by the Expert Panel to FDA, “...no evidence exists to support a role of ingested glutamate in the etiology or exacerbation of...any...long-term or chronic illnesses...” including diseases such as Alzheimer's disease, Huntington's chorea, and amyotrophic lateral sclerosis (Ref. 3).

The Agency is aware of the studies in which LGA, when delivered at high doses to laboratory animals (mice, rats, infant primates) by appropriate route (injection, high-volume force feeding) induces neuronal death-associated lesions at the hypothalamus (and, in rodents, the medulla oblongata). The Agency also is aware of concerns presented by some (Ref. 9) that such findings, if extrapolatable to dietary intake of LGA by humans could have health implications. Such speculations, however, are not supported since there is no scientific evidence to indicate that LGA or MSG as consumed in foods disrupts the neuroendocrine axis. No such glutamate-induced lesions of the hypothalamus or medulla oblongata ever have been seen or described in humans upon autopsy of millions of people - including children - over the years. (Ref. 8). “Claims that orally ingested MSG [or glutamate] causes or contributes to Alzheimer's disease, Parkinsonism, Huntington's Chorea, amyotrophic lateral sclerosis, obesity, early or late puberty, stunting of growth, or infertility must be viewed with extreme skepticism until some evidence is provided.” (Ref. 8).

4. Other specific objection issues raised by TLC. —a. TLC knows of “...no white, practically free-flowing crystalline powder that is ubiquitous in nature.”

Agency response . When organic materials, like amino acids,are purified from nature they take on the physical and chemical characteristics of the purified molecule. Upon release of this purified material to the environment, as a pesticide active ingredient for example, it will dissolve in water and will be indistinguishable from the LGA already in the environment.

b. TLC states that EPA “...falsely asserted that processed free glutamic acid has a long history of food uses”.

Agency response . EPA never has used the term “processed free glutamic acid.” This term is used by TLC, and is not used by members of the scientific community. The terms “LGA” and “monosodium glutamate” define the chemical structures of specific organic molecules and are recognized terms.

c. TLC cites three publications by J. W. Olney to support their conclusion that “...there is growing recognition that the reactive component of monosodium glutamate is processed free glutamic acid...that causes adverse reactions...regardless of the names of the ingredients that contain it or the uses to which it is put.”

Agency response . The scientific research results of J. W. Olney (e.g., Ref. 10) showing neuronal lesions in certain laboratory animals have been considered by EPA in its finding of safety from dietary exposure in humans to LGA. EPA believes Olney's research conclusions are based on effects due to the recognized molecules “monosodium glutamate” or “LGA” regardless of the source (e.g., natural or manufactured) and when delivered in highly purified form and at extreme dose levels.

d. TLC cites a report by Martinez (Ref. 11) and concludes that the author “...found a relationship between glutamate levels in the CSF [cerebrospinal fluid] of the central nervous system, not glutamate levels in the plasma, that were related to migraine headache.”

Agency response . Martinez (Ref. 11) found that glutamic acid levels in CSF [obtained by lumbar puncture during migraine attack] were lower than in CSF of a “stress” control population (e.g., pre-operative surgery patients, acute stroke sufferers, cancer patient, multiple sclerosis sufferers). He also found that glutamic acid levels in plasma of migraine sufferers during attack were lower than in plasma of the “stress” control population. No conclusions on relationships between oral consumption of MSG and migraine can be drawn from the results, since the study was not designed to, or intended to, test such a relationship. The study results are best discussed with regard to possible physiological responses (e.g., glutamate release) to brain events (e.g., cortical blood flow, hypoxic ischemia) that occur during migraine.

e. TLC states “(i)ngestion of processed free glutamic acid causes adverse reactions in susceptible individuals - reactions known to occur as side effects of neurotropic drugs such as valium.”

Agency response . The benzodiazepiene drug Valium (diazepam) is used to treat anxiety disorders, for skeletal muscle relaxation, and as a preoperative anesthetic. It interacts with part of the GABA receptor, in the presence of GABA to enhance GABA-induced changes in membrane potential, thereby augmenting inhibitory effects by stimulating various GABA-ergic pathways. Primary side effects are drowsiness and loss of balance. Thus Valium acts in concert with the neuroinhibitory physiological role of GABA, in apposition to the neuroexcitatory physiological role of L-glutamate.

f. EPA omitted data from the literature on toxic and endocrine-disrupting properties of processed free glutamic acid and its ability to cause adverse effects in humans.

Agency response . TLC did not cite any studies done in humans that show adverse endocrine, neurological, learning, or locomotor effects from exposure to LGA, MSG, or to what TLC refers to as “processed free glutamic acid.” EPA believes it has considered all of the scientific literature.

g. TLC states that certain human studies done with placebos induced reactions in control groups and thereby obscured the results of such studies when the control population was compared to the treated group. TLC cites a study by Strong (Ref. 12) who concluded that placebo materials (e.g., capsules) in some earlier human studies may give headaches to “dietary migraine sufferers.”

Agency response . Strong (Ref. 12) summarized results from six earlier published double-blind studies conducted to test patient sensitivity to tyramine and beta-phenylethylamine. His analysis of the results showed 18% of patients reported headaches from placebos which were concealed in gelatin capsules. In the current study by Strong (Ref. 12), the author was the sole subject in the study. The double-blind component of the study apparently was done with water containing 1 milligram/milliliter (mg/ml) tyramine or with some unspecified amount of unspecified placebo in 20 ml of water. Gelatin capsules were not used. The author suffered headache after consuming 5 of 6 of the tyramine samples, but not from placebo samples. The author self-reported headache from consuming 400 mg of MSG in 15 grams (g) of cottage cheese, from 118 mg partially hydrolyzed vegetable protein in 15 g of ricotta cheese, and 123 g gelatin capsule in potato chips. This part of the study apparently was not double-blinded. The Agency believes the results from an extensive study done by Geha et al. (Ref. 13) represent the best available data in a multicenter, multiphase, double-blind, placebo-controlled study with MSG using 130 self-reporting responders to MSG in the initial phase of the study. A citrus-based placebo beverage was used. The results suggested that “...large doses of MSG given without food may elicit more symptoms than a placebo in individuals who believe they react adversely to MSG. However, neither persistent nor serious effects from MSG ingestion are observed, and the responses were not consistent upon retesting.”

h. TLC states “[t]here is no evidence that surface residue from processed free glutamic acid will be gone prior to harvesting crops...and the applicant failed to note there would be residue in and on food crops.” “To be effective as a plant growth enhancer...processed free glutamic acid would have to be taken up by the plants.” Also, all food crops “[c]ould potentially be treated with processed free glutamic acid.”

Agency response . The tolerance exemption for LGA is supported by a lack of dietary toxicity. Therefore, it is appropriate for the EPA to not require residue data for the pesticidal use of LGA.

i. TLC states they have demonstrated that the glutamic acid in monosodium glutamate or other processed foods is not chemically identical to the LGA found in unadulterated/unprocessed/unfermented food. The glutamate industry has “failed to distinguish between free glutamic and processed free glutamic acid...and only processed free glutamic acid causes adverse reactions in MSG-sensitive people who ingest amounts that exceed their tolerance levels.”

Agency response . TLC has not demonstrated that the chemical entity LGA is somehow different when it is manufactured. The chemical structure of LGA is the same no matter how it is produced, or from the source from which it is derived.

j. “...EPA had the audacity to state in 1988 that `[t]he Agency has no information to suggest that glutamic acid will adversely affect the immune or endocrine systems'...and in 2001...EPA had the gall to ignore the subject of endocrine disruptors entirely.”

Agency response . There is no evidence that dietary consumption of LGA or monosodium glutamate causes adverse effects to the immune or endocrine systems of humans including infants and children.

k. TLC states that “...monosodium glutamate and LGA are given hazard ratings of HR3 (most toxic) indicating an LD 50 below 400 milligrams/kilogram (mg/kg)...in the sixth edition of `Dangerous Properties of Industrial Materials.'”

Agency response . The oral LD 50 values for LGA are reported by the Registry of Toxic Effects of Chemical Substances (RTECS) as > 30 g/kg in the rat and 2.3 g/kg in the rabbit. The oral LD 50 values for MSG are reported at 16.6 g/kg in the rat and 11.4 g/kg in the mouse. These values are consistent with the least toxic category for pesticides, and would not require any precautionary statements for human hazard on the pesticide label. More relevant, is the long history of human dietary exposure to the naturally occurring amino acid, LGA, with no adverse effects - including lethality - ever being attributed, linked, or even expected from such exposures.

l. TLC believes that EPA waived a requirement for a metabolism study with LGA because MSG has GRAS status.

Agency response . A laboratory animal metabolism study (i.e., OPPTS Harmonized Guideline No. 870.7485) is not an EPA requirement for registration of biochemical pesticides (LGA and GABA are classified as biochemical pesticides). Thus, there is no need to waive a requirement for a metabolism study. Yet, the EPA could require such a study for biochemical pesticides if considered warranted. However, such a study in laboratory animals is not warranted because there is extensive knowledge on dietary exposure to, and subsequent metabolism of, LGA in humans without findings of toxicity. Likewise, the GRAS status of MSG supports, and is consistent with, the Agency's finding for a tolerance exemption for LGA.

m. TLC cites a multigeneration reproduction study (Ref. 14) where mice were fed MSG to support their contention that “...failure to find differences in growth or adverse reactions of control and experimental groups may very well have been, in part, to the fact that control groups were receiving neurotoxic substances in their basal diets.” The cited potential component of the basal diet was “yeast food” which TLC states “...invariably contained either protease (which creates processed free glutamic acid during manufacture) or L-cysteine which produces neurotoxic effects...more extensive than the effects of processed free glutamic acid.”

Agency response . In the above cited study, about 800 mice through the F0 to F3 generations were fed basal diet containing 1% MSG, and an additional 800 mice were fed basal diet containing 4% MSG. There were about 1800 mice in the control group, fed basal diet only. There were no observed adverse effects in animals from the control or treated groups. All parameters measured in the control and treated groups were within expected ranges for the mouse. No brain lesions or any other pathological changes were noted. Fertility index, gestation index, viability index, and lactation index were all high, in the MSG-treated animal and control groups. The hypothesis of TLC that neurotoxic components in the basal diet adversely affected the control group animals, and thus masked effects in the dosed group animals when the groups were compared is not supportable when no adverse effects were seen in any group, and all parameters were within expected ranges typical of the normal healthy mouse.

n. TLC states certain animal feeding studies submitted to the Agency were flawed because while they “...accounted for the amount of food consumed by experimental and control groups [they] did not account for the amount of processed free glutamic acid consumed as opposed to being left on the table.” “Every animal owner knows that animals are quite adept at ferreting out and rejecting (not eating) pills or other goodies hidden in their food.”

Agency response . In dietary studies with rodents, test materials are uniformly blended with, and thus uniformly distributed in the food. Therefore, rejection of the diet due to aversion to the test material mixed in the food would be readily determined by a measured decrease in food consumption. Food consumption was accounted for in experimental and control groups in the studies cited, and was comparable among the groups.

o. TLC states that the results from acute toxicity studies done with laboratory animals do not “...mimic the real life situation wherein animals could be sprayed or otherwise come in contact with Auxigro.

Agency response . The acute toxicity battery of studies were done at doses sufficiently high to allow placement of the test material in the least toxic category for pesticides. Considering the acute inhalation toxicity study as an example, rats were exposed in a chamber to 2.58 mg/L for 4 hours. The only effects observed were piloerection, decreased activity, and red crust around the nose. These minor effects resolved by day 4 after exposure. Also, a very high dose of Auxigro (i.e., 5 g/kg) only caused slight and reversible redness to the animals' skin, and the minor eye irritation effects observed also were reversible. It can be concluded that if animals were sprayed with Auxigro during pesticide application and use, they would not be adversely affected.

p. Agency summary response to objections by TLC on the tolerance exemption for LGA. TLC has not provided any scientific documentation that dietary consumption of LGA has caused harm, or will cause harm to humans, including to infants and children. They have not provided any evidence that LGA is allergenic, or when consumed by humans, adversely affects the endocrine system or the central and peripheral nervous system. They have provided no evidence that LGA is carcinogenic. They have not provided any scientific documentation that an oral bolus of MSG causes any adverse effects in humans beyond those typically associated with the MSG Symptom Complex. Even then, the pesticidal use of LGA represents an exposure scenario quite different than the food additive use of MSG as a flavor enhancer. Use of LGA as a pesticide is unlikely to contribute any significant addition of free glutamic acid already in the human diet, and even if use of LGA as a pesticide did significantly increase free glutamic acid in the diet there are no toxic endpoints that have been identified from dietary consumption of LGA. TLC has maintained that LGA is somehow different than the form found in nature when it is produced by microorganisms, or when it is released from protein by other than human digestive proteolytic enzymes. TLC calls this different material “processed free glutamic acid” and maintain that this is the material which causes numerous adverse effects. It mentions certain contaminants that may arise from certain processes that are used, or have been used, in deriving commercially available sources of LGA, but never states that it believes these contaminants are causing adverse effects, or provide any data on dose-response studies to support adverse effects from these materials. In fact, it has “...never stated these so called contaminants are the cause of adverse reactions.” Nevertheless, the tolerance exemption set forth under 40 CFR 180.1187 is for LGA, and is not for any other chemical.

One objector, Lucinda Larsen, objected to the tolerance exemption for LGA and GABA on the ground that it would allow use of unrestricted amounts of “potent neurotoxins” which would interfere with “...almost all bodily functions.” If supplemented in the diet, millions of consumers would suffer death or injury from ingestion of the slightest amount of “processed free glutamic acid” or “manufactured free glutamic acid.” “The glutamic acid found in nature is bound not freed and [is un]able to interfere with bodily functions.” The objector believes the EPA has not considered and “...collect[ed] updated pertinent data from unbiased sources.”

Agency response . The Agency has considered the strength and weakness of the existing scientific data base (e.g., see above) and has concluded that the tolerance exemptions for LGA and for GABA pose no unreasonable risk to human health. Free LGA is found in nature, in human bodies, and in the foods humans eat and it is the same glutamic acid as manufactured from microbial fermentation or by release from proteins. Likewise, free GABA, derived via enzymatic activity (i.e., decarboxylation reaction) from LGA, also is found in humans, plants, and microorganisms. LGA is the most important excitatory neurotransmitter in the central nervous system (CNS). GABA on the other hand is not an excitatory neurotransmitter, but rather is an important inhibitory neurotransmitter.

The exemptions for the requirement of a tolerance for LGA and GABA on all food commodities to which TLC and other objectors filed objections are in force and will remain so.

As detailed in Dr. Andersen's October 13, 1998 response to Mr. Jack Samuels and TLC's first objection to the exemption for LGA in August 1998, EPA scientists critically appraised all the data at that time and came to the conclusion that Mr. Samuels' objection was unwarranted (Ref. 2). However, EPA wishes to make sure all possible areas of disagreement are covered and has reviewed the latest information submitted by the objectors and believes nothing substantive has been added to the body of data known on these chemicals, and no change in the previous exemption is necessary.

As indicated previously, this action announces the Agency's final decision regarding an objection filed under section 408 of FFDCA. As such, this action is an adjudication and not a rule. The regulatory assessment requirements imposed on rulemakings do not, therefore, apply to this action.

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, does not apply because this action is not a rule for purposes of 5 U.S.C. 804(3).

1. Letter from Jack L. Samuels to Sue Smith, The White House, Aug. 20, 1998.

2. Letter from J. Andersen to J. Samuels, Oct. 13, 1998.

3. Raiten, D.J. et al., Analysis of Adverse Reactions to Monosodium Glutamate (MSG), American Institute of Nutrition, MD, 1995.

4. e-Mail from J. Samuels to J. Andersen, 7/28/98.

5. Kuznesof, P.M., Expert Report, undated.

6. Stevenson, D.S. Expert Report, undated.

7. Hattan, D.G. Expert Report, undated.

8. Auer, R.N., Expert Report, undated.

9. Olney, J. W. Excitotoxins in Foods. Neurotoxicology 15(3) 535-544, 1994.

10. Olney, J.W., et al., Cytotoxic effects of acidic and sulphur containing amino acids on the infant mouse central nervous system. Exp. Brain Res. 14:61-76, 1971.

11. Martinez, F., et al. Neuroexcitatory amino acid levels in plasma and cerebrospinal fluid during migraine attacks. Cephalalgia. 13:89-93, 1993.

12. Strong, F.C., Why do some dietary migraine patients claim they get headaches from placebos? Clin. Experimental Allergy. 30:739-743, 2000.

13. Geha R. S. et al., Multicenter, double-blind, placebo-controlled, multiple challenge evaluation of reported reactions to monosodium glutamate. J. Allergy Clin. Immunol. 106:973-980, 2000.

14. Anantharaman, K., In utero and dietary administration of monosodium L-glutamate to mice: reproductive performance and development in a multigeneration study. In “Glutamic Acid: Advances in Biochemistry.” L. J. Filer, et al., eds. Raven Press, N.Y., 1979.

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS 111), e.g., agricultural workers; greenhouse, nursery, and floriculture workers; farmers.

• Animal production (NAICS 112), e.g., cattle ranchers and farmers, dairy cattle farmers, livestock farmers.

• Food manufacturing (NAICS 311), e.g., agricultural workers; farmers; greenhouse, nursery, and floriculture workers; ranchers; pesticide applicators.

• Pesticide manufacturing (NAICS 32532), e.g., agricultural workers; commercial applicators; farmers; greenhouse, nursery, and floriculture workers; residential users.

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

In addition to using EDOCKET (http://www.epa.gov/edocket/) , you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ . A frequently updated electronic version of 40 CFR part 180 is available at E-CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/ . To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gpo/opptsfrs/home/guidelin.htm/.

In the Federal Register of November 7, 2001 (66 FR 56298) (FRL-6808-5), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 1E6232) (PP 0F6080) by Bayer Crop Science LP, formerly Aventis CropScience, P.O. Box 12014, 2 T.W. Alexander Drive, Research Triangle Park, NC 27709. The petition requested that 40 CFR 180.435 be amended by establishing a tolerance for residues of the insecticide deltamethrin, in or on almond hulls; apples, wet pomace; artichokes; brassica, head and stem crop subgroup 5A, excluding cabbage; bulb vegetables ; cabbage (w/wrapper leaves); cabbage (w/o wrapper leaves); carambola (star fruit); corn, field grain; corn, forage (field); corn, fodder/stover (field); corn, refined oil; corn, flour; corn, meal; corn, milled by products; cucurbit vegetables; eggs; fruiting vegetables; leafy vegetables; lichi fruit; milk, fat (reflecting 0.02 ppm in whole milk); mustard greens; pome fruit; poultry, fat; poultry, mbyp; poultry, meat; prunes; rapeseed (including canola and crambe); root vegetable, except sugarbeet (subgroup 1B): roots; ruminant fat; ruminant mbyp; ruminant meat; sorghum, forage; sorghum, fodder/stover; sorghum, grain; soybeans; stone fruit; sunflower seeds; tree nuts; tuberous and corm vegetables subgroup 1C, excluding artichokes; wheat gluten (post harvest); wheat, grain (post harvest); wheat, grain dust (post harvest) at 1.2, 1.2, 0.5, 0.50, 1.5, 1.5, 0.15, 0.2, 0.06, 0.7, 7.0, 0.6, 0.18, 0.12, 0.18, 0.06, 0.02, 0.25, 4.5, 0.2, 0.1, 4.5, 0.2, 0.05, 0.02, 0.02, 2.4, 0.12, 0.15, 0.04, 0.02, 0.02, 0.5, 2.0, 0.5, 0.05, 0.6, 0.05, 4.0, 0.1, 0.04, 1.4, 2.0, and 2.7 parts per million (ppm) respectively . The registrant originally filed petition PP 1E6232 with the Agency, proposing the establishment of regulations for residues of deltamethrin, an insecticide, in or on various food commodities. The petition (PP 1E6232) requested the establishment of proposed tolerances for deltamethrin in/on almond hull, three crop subgroups and rapeseed, and import tolerances for two tropical fruits, as petitioned through the Minor Crop Pest Management program (IR-4). Petition (PP 1E6232) was superceded, at the request of the registrant, by petition (PP 0F6080), including additional tolerances for the above listed crops, and the proposed commodities described in the previous petition (PP 1E6232). The Notice of Filing of November 7, 2001 ( 66 FR 56298) (FRL-6808-5) identified an inclusive summary of both petitions prepared by Bayer Crop Science LP formerly Aventis CropScience, the registrant. There were no comments received in response to the notice of filing.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997) (FRL-5754-7).

Consistent with section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2) of FFDCA, for a tolerance for combined residues of deltamethrin, isomers trans-deltamethrin and α-R-deltamethrin in or on the commodities listed in Unit II. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by deltamethrin is discussed in Tables 1 and 2 of this unit as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies reviewed.

This is a summary of the Commission's Sixth Report and Order, Third Memorandum Opinion and Order, and Fifth Memorandum Opinion and Order, ET Docket Nos. 00-258 and 95-18, FCC 04-219, adopted September 9, 2004, and released September 22, 2004. The full text of this Commission decision is available on the Commission's Internet site at http://www.fcc.gov. It is available for inspection and copying during normal business hours in the FCC Reference Information Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554. The complete text of this document also may be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., Room CY-B402, 445 12th Street, SW., Washington, DC 20554. Alternate formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365.

1. In the Sixth Report and Order (Sixth R&O and Third MO&O ) in ET Docket No. 00-258, the Commission continues its ongoing efforts to promote spectrum utilization and efficiency by evaluating spectrum that may be suitable for the provision of new services, including Advanced Wireless Services (AWS). In the Sixth R&O, we find that the bands 1915-1920 MHz paired with 1995-2000 MHz and 2020-2025 MHz paired with 2175-2180 MHz—which were all previously reallocated for Fixed and Mobile services—are well suited to provide additional spectrum for AWS use and we designate these paired bands for such use. This action will provide an additional twenty megahertz of spectrum for the introduction of new services and technology. We also modified the rules pertaining to unlicensed PCS services in the 1920-1930 MHz band in order to provide additional flexibility to users of the band to offer both voice and data services using a variety of technologies.

2. The Sixth R&O identifies two five + five megahertz spectrum blocks that are especially well suited for AWS use, and find that such a designation will maximize the potential use of the spectrum and promote the deployment of high value service offerings. Specifically, we redesignate the 1915-1920 MHz and 1995-2000 MHz, as well as the 2020-2025 MHz and 2175-2180 MHz spectrum blocks as paired bands suitable for the introduction of new technologies.

3. The Commission concludes that AWS operations in the 1915-1920 MHz band are technically feasible with a ten megahertz frequency separation between Broadband PCS mobile and base operations. We recognize, that additional technical constraints may need to be placed on AWS to avoid impairing incumbent PCS operations. Although we conclude here that this band will be designated for AWS, one goal of the AWS 2 GHZ Service Rules NPRM is to adopt technical rules that will protect existing PCS operations from interference.

4. The Commission also concluded that AWS operations can be deployed in the 1995-2000 MHz band. Several parties contend that technical constraints will need to be placed on new AWS operations in the 1995-2000 MHz band in order to avoid interference to adjacent MSS operations in the 2020-2025 MHz band. However, we note that prior to the reallocation of MSS spectrum in the 1990-2000 MHz band to fixed and mobile services, existing Broadband PCS was immediately adjacent to the MSS. Thus, by redesignating the 1995-2000 MHz band for AWS, fixed and mobile services will remain adjacent to MSS. Because we previously determined that PCS can exist adjacent to MSS, we likewise find that the 1995-2000 MHz band is suitable for an AWS designation. As with the 1915-1920 MHz band, we will consider specific technical requirements that are necessary for new AWS entrants as part of the AWS 2 GHZ Service Rules NPRM.

5. Based on the Commission's determination that additional spectrum is needed for AWS use, and because of the characteristics of the 1915-1920 MHz band that make it well suited for such use, we conclude that such a designation will promote efficient use of the spectrum, allow for the rapid introduction of high-value services, and is otherwise preferable to the other option that has been put forth—introduction of isochronous UPCS rules into the band. Based on the discussions, the Commission found that it is technically feasible to introduce AWS in the band without impairing incumbent PCS with a separation distance between the Broadband PCS mobile and base transmit bands of ten megahertz, and we intend to develop technical rules to ensure that AWS in this band will not interfere with existing PCS operations. Further, the Commission concludes that, given the opportunity, licensees and manufacturers will develop equipment and business plans that put this spectrum to use that will benefit the public. For these reasons, and given the lack of unlicensed use of the 1915-1920 MHz band under the existing rules, the Commission finds that the public interest is best served by redesignating five megahertz of spectrum in the 1915-1920 MHz band for AWS on a primary basis to support the types of high powered mobile applications associated with AWS and Broadband PCS expansion and pairing it with the five megahertz of spectrum at 1995-2000 MHz that we previously designated for AWS. Accordingly, we modify the Table of Allocations to reflect the applicable rule parts for these services, and update Part 15 rules to remove the 1915-1920 MHz band from asynchronous UPCS use. Because their pleadings are inconsistent with the AWS designation for the 1915-1920 MHz band we adopted, we deny the waiver petitions from Lucent, Ascom, Alaska Power, RBM, and UTStarcom & Drew University. We likewise deny the petitions for rulemaking from WINForum and UTStarcom.

6. The Commission recognizes that many of the comments have been outdated by more recent developments in this proceeding. For example, some of the bands identified by commenters are no longer available to be paired. We also reject those comments that would have us make the 2020-2025 MHz band available for Federal Government operations because we have already proposed relocation procedures that would not require Federal Government relocation into the band. Moreover, such a designation would limit use of this spectrum by the public and would require us to re-evaluate our BAS relocation procedures to accommodate the entry of Federal Government users in the band. We also disagree with those commenters that support relocating displaced UPCS to the 2020-2025 MHz band, given our previous analysis of asynchronous UPCS operations, the conclusion that there are no current operations to be displaced, and our findings that additional AWS spectrum will promote new technologies and services, make efficient use of the spectrum, and use the spectrum to its highest potential.

7. As part of our decision to redesignate the 2020-2025 MHz and 2155-2180 MHz bands in the AWS Third R&O, we also proposed options for pairing the 2020-2025 MHz band with spectrum in the 2155-2180 MHz band for new Fixed and Mobile services, including AWS. Because these bands have been redesignated for AWS, we find the 2020-2025 MHz band suitable for pairing with the 2175-2180 MHz band. We also note that AWS entrants may also benefit from the introduction of terrestrial services in the adjacent MSS band under MSS/ATC authority. Pairing 2020-2025 MHz with 2175-2180 MHz could benefit from the design of equipment in the adjacent MSS spectrum—in particular, equipment deployed to provide MSS/ATC service—which in turn could allow for potential economies of scale and generally promote the more rapid deployment of new service offerings.

8. In conjunction with our redesignation of the 1915-1920 MHz band for AWS, the Commission finds that UTAM must be fully and fairly reimbursed for relocating incumbent microwave users in this band. We agree with commenters that UTAM should be made whole for the investments it has made in clearing the UPCS bands. Accordingly, UTAM is entitled to reimbursement of twenty-five percent—on a pro-rata basis—of the total costs it has incurred, including its future payment obligations for links it has relocated, as of the date that a new entrant gains access to the 1915-1920 MHz spectrum band. A new AWS licensee in the 1915-1920 MHz band must pay this amount before it begins operations in the band, and under any specific terms or conditions that we adopt in the AWS 2 GHz Service Rules NPRM.

9. The Commission's decision to require new entrants in the 1915-1920 MHz band to reimburse UTAM a pro rata share of costs, in addition to being consistent with the comments supporting a reimbursement mechanism for UTAM, offers a fair and easy procedure to implement. Because UTAM has already cleared most of the incumbent microwave links deployed across the entire 1910-1930 MHz band, this reimbursement plan represents the most reasonable and easiest approach to address the relocation costs that UTAM has already incurred. We believe that such a course is superior to the difficult and complex prospect of making retroactive calculations for apportionment and represents an equitable and administratively efficient means of compensating UTAM.

10. We first conclude that AWS licensees that do not begin operations in the 1990-2025 MHz band until after this spectrum has been cleared will not have to participate in the relocation process of incumbent BAS licensees. These AWS licensees will receive unencumbered spectrum, the value of which will be reflected in the auction price. Further, these late-entering AWS licensees will not have any reimbursement obligation to Nextel, if Nextel has received credit for BAS relocation costs in the 800 MHz true-up. These AWS licensees may, under certain circumstances, have reimbursement obligations to MSS entrants, otherwise, these AWS licensees would not have a reimbursement obligation to MSS entrants.

11. The Commission will require an AWS licensee that enters the band prior to the milestones established for Nextel and MSS licensees to participate in the BAS relocation process. AWS licensees shall generally follow a relocation plan modeled on the policies set forth in our earlier Emerging Technologies proceeding and, in particular, follow the requirement that new entrants provide comparable facilities to incumbents that are relocated. Accordingly, AWS licensees must provide comparable facilities to BAS incumbents that are relocated. Further, AWS licensees, Nextel and MSS licensees, each of which individually is authorized to operate on a fraction of the band, will mutually benefit from the clearance of all BAS licensees in the band. An AWS licensee will be responsible, similar to other new entrants, to relocate all BAS operations from 1990-2025 MHz, even if it ultimately does not build its own facilities in some geographic areas. As we determined in the MSS Third R&O and affirmed in the 800 MHz R&O, a one-phase relocation plan avoids the possibility of BAS operations on three different band plans, and eliminates the potential disruption and down time to BAS associated with being relocated under two different phases in a short period of time. We also note that our decision to accommodate AWS entrants into the band does not alter our need to minimize the disruption to incumbent BAS operations during the transition. Therefore, we believe that, in the event BAS relocation has not been completed, including AWS licensees as participants in the relocation of all BAS operations from the 1990-2025 MHz band strikes an appropriate balance that is not unduly burdensome on AWS entrants, while also fair to the BAS incumbents and the other entrants in the band.

12. All entrants must clear the entire 1990-2025 MHz band (a total of thirty-five megahertz of spectrum) while only operating in 1990-1995 MHz (a total of five megahertz of spectrum for Nextel), in 2000-2020 MHz (a total of twenty megahertz of spectrum for MSS), and in 1995-2000 MHz and 2020-2025 MHz (a total of ten megahertz of spectrum for AWS). Therefore, the pro rata share for AWS licensees, collectively, represents the costs to relocate two-sevenths of the spectrum (one-seventh for each five megahertz block).

13. Given the Commission's decision in the AWS Second R&O to apply the modified procedures to AWS licensee relocation of FS in the 2110-2150 MHz band, we conclude that it is appropriate to apply the same procedures to the relocation of FS by AWS licensees in the 2175-2180 MHz band. Specifically, §§ 101.69 through 101.82 of the rules set forth the provisions governing the transition from FS to ET services, including both the more generic ET relocation procedures for PCS and AWS and the MSS modifications. For example, these rules set forth, among other matters, provisions regarding voluntary and mandatory periods, sunset provisions, involuntary relocation procedures, and the allocation of reimbursement expenses by subsequently entering ET licensees. By making the modified MSS provisions applicable in the 2175-2180 MHz band, new AWS entrants will be governed by the same relocation rules that apply to AWS entrants in the other bands subject to part 101 relocation. In short, we believe that relocation procedures for AWS in the 2175-2180 MHz band that are consistent with the relocation procedures discussed in this and related proceedings will foster a more efficient roll-out of AWS, will minimize confusion among the parties, and will thereby serve the public interest.

14. We are modifying the rules for UPCS in the 1920-1930 MHz band to provide additional flexibility for the use of other types of voice based systems. Specifically, we will remove the requirement to use specified channels, allow devices to transmit with a maximum bandwidth of 2.5 megahertz, and we will delete the packing rule. In addition, we will allow asynchronous operation in this band. We believe that these changes will promote the introduction of spectrally efficient equipment that will be widely supported by the public.

15. In the Third Memorandum Opinion and Order in ET Docket No. 00-258, the Commission denies a petition for reconsideration jointly filed by XM and Sirius that claims that the Commission failed to consider their comments regarding use of the 2360-2395 MHz band as replacement spectrum for users relocated from the 1710-1755 MHz and 2110-2155 MHz bands, and the effect that such use would have on adjacent satellite systems.

16. Also, the Commission denies petitions for reconsideration filed by Sprint and WCA that sought comparable replacement spectrum and full compensation for relocation costs for displaced Multipoint Distribution Service (MDS) licensees in the 2150-2162 MHz band.

17. Additionally, the Commission dismisses a petition for reconsideration filed by PCIA that sought modification of § 101.99 of the rules to establish a clearinghouse to oversee cost-sharing procedures associated with incumbent relocation in the 2110-2150 MHz band.

18. Finally, the Commission denies petitions for reconsideration filed by Celsat, CTIA, ICO, SIA, and TMI and TerreStar that oppose the decision to reallocate portions of the 2 GHz MSS spectrum.

19. In the Fifth Memorandum Opinion and Order in ET Docket No. 95-18, the Commission grants in part, by clarifying certain rules, and otherwise denies a petition for clarification and reconsideration jointly filed by the American Petroleum Institute and the United Telecom Council concerning the negotiation and relocation procedures for incumbent Fixed service licensees in the 2110-2150 MHz and 2180-2200 MHz bands.

20. As required by the Regulatory Flexibility Act (RFA)  1 an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Third Notice of Proposed Rulemaking (Third NPRM). 2 The Commission sought written public comments on the proposals in the Third NPRM, including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 3

21. The Sixth Report and Order ( Sixth R&O ) continues our efforts to allocate spectrum that can be used for the provision of advanced wireless services (AWS) to the public, which in turn supports our obligations under section 706 of the 1996 Telecommunications Act  4 and, more generally, serves the public interest by promoting rapid and efficient radio communications facilities.

22. The Sixth R&O discusses the need for spectrum allocations to allow for the provision of AWS. Specifically, it:

• Refutes argument that Broadband PCS mobile and base transmit bands must have separation of fifteen megahertz, and found that a ten megahertz separation is suitable without causing interference between services in these bands.

• Redesignated the 1915-1920 MHz and 2020-2025 MHz bands for AWS use.

• Redesignated the 2020-2025 MHz and 2175-2180 MHz bands for AWS use.

• Paired the 1915-1920 and 1995-2000 MHz bands and 2020-2025 and 2175-2180 MHz bands for the provision of AWS use.

• Adopts the UTAM reimbursement plan for the 1915-1920 MH z band, allowing relocation efforts of microwave links to continue in the 1910-1930 MH z band without disruption, while making the band available for other spectrum efficient services.

• Denies all petitions for rulemaking and petitions for waivers filed in this proceeding regarding the 1910-1920 MH z band.

• Provided additional flexibility for UPCS operations in the 1920-1930 MH z band.

23. There were no comments filed that specifically addressed the rules and policies proposed in the IRFA.

24. The RFA directs agencies to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the rules adopted herein. 5 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business ” “small organization,” and “small governmental jurisdiction.”  6 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 7 Nationwide, there are a total of 22.4 million small businesses, according to SBA data. 8 A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 9 A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.”  10 Nationwide, there are approximately 1.6 million small organizations. 11 The term “small governmental jurisdiction” is defined as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.”  12 As of 1997, there were approximately 87,453 governmental jurisdictions in the United States. 13 This number includes 39,044 county governments, municipalities, and townships, of which 37,546 (approximately 96.2%) have populations of fewer than 50,000, and of which 1,498 have populations of 50,000 or more. Thus, we estimate the number of small governmental jurisdictions overall to be 84,098 or fewer.

25. Broadcast Auxiliary Service (BAS). BAS involves a variety of transmitters, generally used to relay broadcast programming to the public (through translator and booster stations) or within the program distribution chain (from a remote news gathering unit back to the stations). The Commission has not developed a definition of small entities specific to broadcast auxiliary licensees. The U.S. Small Business Administration (SBA) has developed small business size standards, as follows: (1) For TV BAS, we will use the size standard for Television Broadcasting, which consists of all such companies having annual receipts of no more than $12.0 million;  14 (2) For Aural BAS, we will use the size standard for Radio Stations, which consists of all such companies having annual receipts of no more than $6 million;  15 (3) For Remote Pickup BAS we will use the small business size standard for Television Broadcasting when used by a TV station and that for Radio Stations when used by such a station.

26. According to Commission staff review of BIA Publications, Inc. Master Access Television Analyzer Database as of May 16, 2003, about 814 of the 1,220 commercial television stations in the United States had revenues of $12 million or less. We note, however, that, in assessing whether a business concern qualifies as small under the above definition, business (control) affiliations  16 must be included. 17 Our estimate, therefore, likely overstates the number of small entities that might be affected by our action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. There are also 2,127 low power television stations (LPTV). 18 Given the nature of this service, we will presume that all LPTV licensees qualify as small entities under the SBA size standard. According to Commission staff review of BIA Publications, Inc., Master Access Radio Analyzer Database, as of May 16, 2003, about 10,427 of the 10,945 commercial radio stations in the United States had revenue of $6 million or less. We note, however, that many radio stations are affiliated with much larger corporations with much higher revenue, and, that in assessing whether a business concern qualifies as small under the above definition, such business (control) affiliations  19 are included. 20 Our estimate, therefore, likely overstates the number of small businesses that might be affected by our action.

27. Cable Antenna Relay Service (CARS). CARS includes transmitters generally used to relay cable programming within cable television system distribution systems. The SBA has developed a small business size standard for Cable and other Program Distribution, which consists of all such companies having annual receipts of no more than $12.5 million. According to Census Bureau data for 1997, there were 1,311 firms within the industry category Cable and Other Program Distribution, total, that operated for the entire year. 21 Of this total, 1,180 firms had annual receipts of under $10 million, and an additional fifty-two firms had receipts of $10 million to $24,999,999.00. 22 Thus, under this standard, the majority of firms can be considered small.

28. Fixed Microwave Services. Microwave services include common carrier, 23 private-operational fixed, 24 and broadcast auxiliary radio services. 25 At present, there are approximately 36,708 common carrier fixed licensees and 59,291 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services. The Commission has not yet defined a small business with respect to microwave services. For purposes of the FRFA, we will use the SBA's definition applicable to wireless and other telecommunications companies— i.e. , an entity with no more than 1,500 persons. 26 According to Census Bureau data for 1997, there were 977 firms in this category, total, that operated for the entire year. 27 Of this total, 965 firms had employment of 999 or fewer employees, and an additional twelve firms had employment of 1,000 employees or more. 28 Thus, under this size standard, majority of firms can be considered small.

29. We note that the number of firms does not necessarily track the number of licensees. We estimate that all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as small entities under the SBA definition. Of these licenses, approximately fourteen are issued for frequencies in the Emerging Technology bands affected by this proceeding. This, assuming that these entities also qualify as small businesses, as many as fourteen small business licensees could be affected by the rules we adopt. We note that these entities have been subject to relocation by UTAM under rules originally adopted in the Commission's Emerging Technologies proceeding. UTAM is the Commission's frequency coordinator for UPCS devices in the 1910-1930 MH z band. The Sixth R&O anticipates that these general relocation rules will continue to apply to FS microwave licensees and does not propose to modify the class of licensees that are subject to these relocation provisions.

30. Mobile Satellite Service. Neither the Commission nor the U.S. Small Business Administration has developed a small business size standard specifically for mobile satellite service licensees. The appropriate size standard is therefore the SBA standard for Satellite Telecommunications, which provides that such entities are small if they have $12.5 million or less in annual revenues. 29 Currently, nearly a dozen entities are authorized to provide voice MSS in the United States. We have ascertained from published data that four of those companies are not small entities according to the SBA's definition, 30 but we do not have sufficient information to determine which, if any, of the others are small entities. We anticipate issuing several licenses for 2 GH z mobile earth stations that would be subject to the requirements we are adopting here. We do not know how many of those licenses will be held by small entities, however, as we do not yet know exactly how many 2 GH z mobile-earth-station licenses will be issued or who will receive them. 31 The Commission notes that small businesses are not likely to have the financial ability to become MSS system operators because of high implementation costs, including construction of satellite space stations and rocket launch, associated with satellite systems and services.

31. Unlicensed Personal Communications Services. As its name indicates, UPCS is not a licensed service. UPCS consists of intentional radiators operating in the frequency bands 1920-1930 MH z and 2390-2400 MH z , that provide a wide array of mobile and ancillary fixed communication services to individuals and businesses. The Sixth R&O affects UPCS operations in the 1920-1930 MH z band; operations in those frequencies are given flexibility to deploy both voice and data-based services. There is no accurate source for the number of operators in the UPCS. The Commission has not developed a definition of small entities applicable to UPCS equipment manufacturers. However, the SBA has developed a small business size standard, Cellular and Other Wireless Carriers, which consists of all such companies having 1500 or fewer employees. 32 According to the Census Bureau data for 1997, there were 977 firms in this category, total, that operated for the entire year. 33 Of this total, 965 firms had employment of 999 or fewer employees, and an additional 12 firms had employment of 1,000 employees or more. 34 Thus, under this size standard, the great majority of firms can be considered small.

32. The Sixth R&O addresses the possible use of the bands 1915-1920 MHz and 1995-2000 MHz to support the introduction of new AWS, but does not propose service rules. Thus, the item contains no new reporting requirements. The Sixth R&O modifies the procedures by which incumbent licensees in the 1915-1920 MHz and 1995-2000 MHz band are to be relocated by new entrants. The relocation procedures set forth in the Sixth R&O are based on relocation procedures that had been previously adopted for larger blocks of spectrum that include the bands 1915-1920 MHz and 1995-2000 MHz, but that did not account for new AWS entrants in these bands. For example, the Sixth R&O determines that the principle that new licensees must reimburse UTAM, Inc., for a proportional share of the band-clearing costs UTAM has incurred in relocating the 1910-1930 MHz band should apply to new AWS entrants in the 1915-1920 MHz band. The Sixth R&O modifies previously established recordkeeping and other compliance requirements but does not substantively add to those requirements. Licensees that were previously subject to relocation requirements will still be subject to relocation requirements, but now may be involved in relocation discussions with additional entities— i.e. AWS licensees. Similarly, new entrants that were required to share relocation costs now may share those costs with new AWS licensees.

33. The RFA requires an agency to describe any significant alternatives that it has considered in developing its approach, which may include the following four alternatives (among others): “(1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”  35

34. The Commission considered and rejected proposals to not redesignate the 1915-1920 MHz band for AWS. One alternative proposed by Ascom, Siemens, Verizon and others would have had us retain this band for unlicensed PCS use and modify the pre-existing UPCS rules to allow for a greater variety of applications in the band. To the extent that small entities are UPCS users, and users of unlicensed bands are typically exempt from the reporting requirements that are necessary to secure, maintain, and renew a license that is a necessary requirement for operation under our licensed service rules, the retention of the 1915-1920 MHz band for UPCS might have minimized the economic impact on small entities. We rejected this approach because we concluded that it is feasible to introduce high powered licensed services into the band, there is a need for additional spectrum for AWS applications, and there are no current users of the 1915-1920 MHz band. Even if we were to modify the rules to allow greater UPCS use of the band, the types of applications that could be deployed under the UPCS rules would not provide the public benefits associated with AWS applications.

35. Pursuant to Sections 1, 4(i), 303(f) and (r), 309, 316, 332 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 303(f) and (r), 309, 316, and 332, the Report and Order and the rules specified in Appendix A will become effective November 26, 2004.

36. The Petitions for Rulemaking filed by the Wireless Information Networks Forum and UTStarcom Inc., and the Petitions for Waiver filed by Lucent Technologies Inc., UTStarcom Inc. and Drew University, Ascom Wireless Solutions Inc., Alaska Power & Telephone Company Inc., and RBM Communications Are denied.

37. Pursuant to sections 4(i), 302, 303(e) 303(f), 303(g), 303(r) and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 302, 303(e), 303(f), 303(g) and 405, the joint petition for clarification and reconsideration filed by the American Petroleum Institute and the United Telecom Council (API/UTC), in ET Docket No. 95-18, Is granted IN PART to the extent discussed in the NPRM, and otherwise Is denied.

38. The Petitions for Reconsideration filed by Sirius and XM, Sprint, and WCA Are denied.

39. The Petition for Partial Reconsideration filed by PCIA—The Wireless Infrastructure Association Is dismissed.

40. The Petitions for Reconsideration filed by Celsat, CTIA, ICO, SIA, and TMI and TerreStar Are denied.

41. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, Shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

42. The Commission will send a copy of the Sixth Report and Order including FRFA, in a report to be sent to Congress and the Government Accountability Office (GAO) pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).